When you think of insurance, the first thing that comes to mind is protection. Most people cannot rebuild their home and replace everything in it after a disaster strikes. Due to this reason, they need homeowners insurance. However, there are several things you must know about homeowners insurance.
Coming to the coverage for home insurance, the standard policies include four coverage. These include coverage for the structure of your home, coverage for your personal belongings, liability protection, coverage for additional living expenses, etc. Let us look at each of these coverages closely.
Coverage For Structure Of Your Home
The homeowners policy pays you to repair as well as rebuild the home if it gets damaged by lightning, fire or any other disaster. In fact, most of the policies also cover detached structures such as a tool shed, garage, etc.
But you must remember that a standard policy will not pay for the damages caused by earthquake or floods. So, purchase enough coverage to rebuild the home.
Coverage for Liability Protection
Liability covers you against any lawsuits for property damage or bodily injury that either you or someone in your family caused to other people. Apart from these, it also pays up for the damage your pet has caused.
Now, the liability part of your policy pays up for both the cost of defending you in the court as well as court awards to a limit stated in the policy document. It is better to discuss whether you should purchase a higher level of protection with the insurance providing company. If you have significant assets and want more coverage than available under the homeowners insurance coverage, get an umbrella or excess liability policy providing a broader coverage and high liability.
The policy even provides no-fault medical coverage so if a neighbor or friends gets injured at your home, they can submit the medical bill to your insurance provider.
Coverage for Additional Living Expenses (ALE)
ALE pays for the additional cost of living away from home if you can’t stay there due to some damage. In fact, this home insurance covers the hotel bills, restaurant meals and other costs along with usual living expense incurred while the home was rebuilt.
You should also keep in mind that the ALE coverage in the policy comes with limits and some of the policies come with a time constraint. Apart from this, if you rent out part of the house, ALE covers the rent you would have collected from the tenant if the home wasn’t destroyed.
Other Protections Homeowners Insurance Provides
Every home insurance policy is different, but there is coverage that these insurances provide you. These are coverage one don’t normally think of when buying the insurance, but it is important to keep in mind. These include debris removal, green home coverage, grave markers, etc. That’s not all, the insurance coverage also includes identity fraud, unauthorized use of credit cards and more.
What Homeowners Insurance Don’t Cover?
There are different things the homeowners insurance won’t cover. Some of these are obvious and some are not. You must know that floods and earthquakes are not covered under the insurance policy. However, the exclusions different from each company and from state to state.
Home insurances are a matter of extreme importance. Every owner needs to have it. It offers coverage in two forms- coverage against property damage and coverage for liability exposure.