The inside scoop on homeowner’s insurance
If home is where the heart is, then you undoubtedly want that heart to be protected by insurance.
That’s where homeowner’s insurance comes in. It provides financial protection against disasters, insuring the home and what’s in it. A basic home policy will cover the repair or rebuilding of your home if it’s damaged by fire, smoke, frozen pipes, ice and snow. (Damages caused by flood or earthquakes require separate policies.) To determine the cost of rebuilding your home, factor in the style of the house, number of rooms, square footage, type of roof and type of exterior wall construction.
In the event of a theft, fire, hurricane or other disaster, possessions like furniture, clothing and other personal items will also be covered. Expensive items like jewelry are covered, but only up to $1,000 to $2,000. (A special policy, called a floater, can cover their full value.) To figure out how much coverage you need, make a detailed list of everything you own and its cost. Your belongings can be insured for their cash value or their replacement cost. A cash value policy pays the cost to replace your belongings, minus depreciation. A replacement cost policy reimburses you for the cost to replace the item (which is usually about 10 percent more than the actual cash value).
Homeowner’s policies also cover lawsuits for bodily injury you or family members cause to other people or damage caused by pets. If you are brought to court, the policy covers your legal and court fees. Most policies provide a minimum of $100,000 worth of liability insurance.
Policies also pay for living expenses if you are living away from home temporarily while your home is being rebuilt after a fire, storm or other insured disaster. Coverage varies from company to company.
Mortgage lenders require that you purchase a minimum amount of homeowners insurance, but ask your insurance agent if your policy has enough coverage. You can get insurance through your local insurance agent or insurance companies, or via the phone, mail or online. Consult your state insurance department, the yellow pages, family or friends for recommendations or further information.