Home Owners and Renters Insurance Coverage

A homeowners insurance policy insures your possessions as well as your home.

A Package Policy

A homeowners insurance policy is purchased as a package. A package policy covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or a member of your household causes to other people. This includes damage caused by household pets.

While a homeowners insurance policy covers most types of disasters, there are some exceptions, such as floods, earthquakes, and poor maintenance, or wear and tear. If you want coverage for floods or earthquakes, you usually have to purchase separate policies or pay additional fees to add this coverage. Problems related to maintenance, such as corroded pipes or a leaking roof, are the homeowner's responsibility to take care of. Keeping up with the maintenance of your home will reduce the likelihood of a loss in the future.

It’s very important to have homeowners insurance coverage that is specific to your needs. No one knows for sure when a loss will occur, but when it does, you will need the money to fix it. After Hurricane Katrina, for example, many people were left without homes because they didn't have flood insurance. It’s important to get the proper coverage for your area. Standard homeowners policies do not cover flooding; this must be purchased separately through your homeowners insurance agent. Be sure to discuss all possible disasters with your agent, broker, or insurance company.

Replacement Cost

Replacement cost coverage allows you to repair your home to the state it was in before the damage occurred. Actual cash value coverage refers to replacement cost minus depreciation. The older your possessions, the less you will recover from the homeowners insurance company after a disaster.

Renters Insurance

Insurance coverage is available for renters as well as homeowners. If you rent a house or apartment and you have renters insurance, you will be covered if a loss occurs. Renters insurance is relatively inexpensive. It covers your property, liability, and loss of use of the home due to a covered loss.

Homeowners Insurance Coverage Types

The standard homeowners insurance policy contains four different types of coverage. First, it offers coverage for the structure of your home, which means that they will repair or rebuild your home in the event of a covered loss. Second, it offers coverage for the personal belongings you have in your home. This means in the event of a covered loss, you will be able to replace your belongings. It’s a good idea to make sure your policy carries replacement cost, rather than actual cash value, so that your belongings won’t be depreciated in the event of loss. With replacement cost coverage, you can replace your property with items of like kind and quality. Third, it offers liability protection in case of a lawsuit against you or a member of your household for bodily injury or property damage caused to another party. Fourth, it offers living expenses if you are temporarily unable to live in your home because of an insured disaster.

Most homeowners insurance policies offer additional coverage options. Also, there may be limitations for certain types of property. You should be sure to discuss these options and exclusions with your agent when you apply for coverage.