For most people, their home is their largest investment and the centerpiece of their retirement savings. Homeowners insurance is necessary to protect that investment, but do you know what type to get and how much coverage you need? There are four types of coverages that are contained in the homeowner’s policy: dwelling and personal property, personal liability, medical payments, and additional living expenses.
We’ve compiled some guidelines for you to help make the decision process a little easier. You can read the whole, unabridged version here.
Property Damage Coverage
Property damage coverage helps pay for damage to your home and personal property. Other structures such as a detached garage, a tool shed, or any other building on your property are usually covered for 10% of the amount of coverage on your house.
Personal property coverage will pay for personal property including household furniture, clothing, and other personal belongings. The amount of insurance coverage is usually 50% of the policy limit on your dwelling. The coverage is also limited by the types of loss listed in the policy. The coverage only pays the current cash value of the item destroyed, unless you purchase replacement cost coverage. Your homeowner’s policy also provides off-premises coverage. This means that the policy covers your belongings against theft even when they are not inside your home.
Personal Liability Coverage
Homeowner’s policies provide personal liability coverage that applies to non-auto accidents on and off your property if the injury or damage is cased by you, a member of your family, or your pet. The liability coverage in your policy pays both for the cost of defending you and paying for any damages the court rules you must pay. Liability insurance does not have a deductible that you must meet before your insurer begins to pay losses. The basic liability coverage is usually $100,000 for each occurrence. You can request higher limits that are available for an additional cost.
Medical Payments Coverage
Medical payment coverage pays if someone outside your family is injured at your home regardless of fault. This includes payment for reasonable medical expenses incurred within one year from the date of loss for a person who is injured in an accident in your home. The coverage does not apply to you and members of your household.
Additional Living Expenses
If it is necessary for you to move into a motel or apartment temporarily because of damage caused by a peril covered in your policy, your insurance company will pay an amount up to 20% of the policy limit on your dwelling for these expenses.
You can protect your home, property and liability with the proper insurance policy. Take the time to access what you need to ensure you are covered.