Insurance can be a pesky, annoying, little necessity; but a necessity it is. There it goes, taking money out of your pocket for a big fat what if. The thing is, when that big fat what if comes, you will be thanking your lucky stars for it.
There are many layers to your insurance policy, overlapping to make sure that your coverage is complete. Most everyone knows the basics, but I’m here to explain how your homeowners insurance policy will help you in terms that any person can understand.
First part of the policy is your dwelling coverage. This is the coverage of the dwelling structure, the wood, nails and all the materials that went into building what is now your residence. Most of the time insurance companies work with the mortgage brokers to make sure the amount covered is enough to satisfy the loan requirements. If this is a property you own outright, it’s the value of the home at present date. In order for you to be safely covered, you have to make sure at least 80% of what you owe is covered in the insurance policy.
The second part of the policy is other structures. These are detached garages, sheds, or any other stand alone structure on your property. Usually they have a set amount of 10-20% per structure from the amount of your dwelling coverage, but you can always work with the insurance agent to make sure the amount covered is enough to rebuild. This is a very limited part of your policy, considering nothing on the inside of stand alone structures is covered.
The third coverage layer in your homeowner’s policy, is coverage c : personal property. This is where your homeowners policy gets, well, personal. Now you know when a fire happens, or something happens to your home that leaves it in shambles, it’s not just the structure itself you are worried about, but all of the memories and valuables inside. It covers anything in your home that is not attached to the structure. For example, your bikes, clothing, televisions, couches, wall art, and any other personal property inside will be replaced with something of like value. If, however, you have certain antiques, or high priced jewels or silver, it’s best to get those itemized with your insurance company. The best route for that is to get them appraised, then fax the appraisal to the insurance company.
Coverage D, loss of use and additional living expenses is very cut and dry. They give you a certain amount of money for each day your home is rendered inhabitable. They give you money for the move, and to live in some other place than your home. Until your home is habitable again, they give you money to maintain your normal way of living.
Coverage E, medical payments are for when someone gets hurt in your home and needs to be seen by a doctor. For example, your daughters friend Thelma comes over, and falls and scrapes her knee by the pool in the backyard. Turns out, she sprained her ankle, and needed to go to the hospital. Depending on your insurance company, they will give you somewhere between one thousand to about 5 thousand per incident.
Coverage F, personal liability is for damage or injury you cause to others and your family. This will cover any libel, slander, or physical injury up to a set amount discussed by you, and your insurance agent. This typically helps prevent anyone from suing you out of house and home.
There are many different ways to work with an insurance company to make the best homeowners policy for you, whether its 500 sq ft or 5000 sq ft. Whether you have a mortgage or you have a home you own outright, homeowners insurance is something you should never think of as a luxury.
A few years ago, a man who built his home with his own hands decided to get rid of his insurance policy. That summer, his home caught on fire and burned to the ground. Unfortunately, because of his decision to cancel his policy, he lost everything and had to start from scratch.
All in all, though Homeowners Insurance may not be required unless you have a mortgage, there is nothing worse than someone losing their home, and all of their memories. Insurance companies are not there to hinder you or drain your bank account. They are here to help you in the event of some disaster that renders your family helpless and your home uninhabitable. Homeowners Insurance is an important asset, and over time, you will realize that too.