Homeowners Insurance Information

What is in a Standard Homeowners Insurance Policy?

A standard homeowners insurance policy includes four essential types of coverage. They include:

1. Coverage for the structure of your home.
2. Coverage for your personal belongings.
3. Liability protection.
4. Additional living expenses in the event you are temporarily displace from your home due to fire or another insured event.

1. The Structure of Your House
   This part of your policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disasters outlined in your policy. Structures not attached to the home but are included in the overall value of the home, such as garages, tool sheds or gazebos, can also be covered for a payout of approximately 10% of the insured amount for the home.
   
   Not included in portion of the policy are damages caused by a flood, earthquake or routine wear and tear. Remember, when purchasing coverage for your home’s strucuture, it is important to buy enough to completely cover the appraised value. If you require need more coverage, talk to your insurance agent about purchasing more insurance.


2. Your Personal Belongings
   Furniture, clothes, sports equipment and other personal items stolen or destroyed by fire, hurricane or other insured disaster are generally insurable under a Homeowners policy. On average coverage of approximately 50-70% of insuranced amount for your home’s structure is recommended. For example, if your home’s structure has $100,000 worth of insurance, you should consider requesting between $50,000 to $70,000 worth of coverage for your belongings. A more accurate determination of coverage can always be determined by conducting a home inventory.
   
   This part of your policy includes off-premises coverage. This means that your belongings are covered anywhere in the world, unless you have decided against off-premises coverage. Some companies limit the amount to 10% of the amount of insurance you have for your possessions. You have up to $500 of coverage for unauthorized use of your credit cards.
   
   Expensive items like jewelry, furs and silverware are covered, but there are usually dollar limits if they are stolen. Generally, you are covered for between $1,000 to $2,000 for all of your jewelry and furs. To insure these items to their full value, purchase a special personal property endorsement or floater and insure the item for it's appraised value. Coverage includes “accidental disappearance,” meaning coverage if you simply lose that item.
   
   This part of your policy can also include off-premises coverage, meaning that your belongings are covered anywhere in the world. Amounts may be limited to 10% of the amount of insurance held for possessions, and also may include up to $500 of coverage for unauthorized use of credit cards. Ask your agent if off-premises coverage is applicable for your policy.
   
   Trees, plants and shrubs are also covered under standard homeowners insurance. Generally you are covered for 5% of the insurance on the house—up to about $500 per item—which protects the policy holder from occurences of theft, fire, lightning, explosion, vandalism, riot and even falling aircraft. Wind or disease damages are not covered.

Liability Protection

Liability Protection extends to lawsuits for bodily injury or property damage claims issued against you or your family members. It also pays for damage caused by your pet. For example, if you, your child or your pet should accidentally ruin your neighbor’s expensive rug, your insurance will cover these damages. Additionally, this portion of your policy can cover defense costs, fees and awards, up to the limit of your policy, should you be called into court.

Liability limits generally start at about $100,000. However, experts recommend that you purchase at least $300,000 worth of protection. Umbrella or excess liability policy which provides broader coverage, can also be purchased, and include coverage for libel or slander claims against you, as well as higher liability limits.

Policies can also provide no-fault medical coverage in the event a friend or neighbor’s injury in your home. Medical bills can be submitted to your insurance company so that expenses are paid without a liability claim being filed against you. However, this coverage does not extend to medical claims from you or your family.

Additional Living Expenses

This pays the additional costs of living away from your home should you be unable to return due to damage from a fire, storm or other insured disaster. It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt. Coverage for additional living expenses can differ from company to company. Many policies provide coverage for approximately 20% of the insurance on your home. However, some insurers allow for additional coverage in this area. Some companies sell a policy that provides an unlimited amount of loss-of-use coverage, but it generally is only redeemable for a limited amount of time.

If you rent out part of your home, this coverage also reimburses you for the rent that you would have collected from your tenant if your home had not been destroyed.

Back to Homeowners ArticlesObtain a Homeowners quote

Information provided with permission from the Insurance Information Institute, Inc.