This time of year, we have many customers buying their first homes and they often have many questions on the basics of home insurance. Since your home is probably your most valuable asset, you want to make sure you understand how home insurance works and how to best protect your investment.
So what exactly does a basic home insurance policy cover? Read the article below abridged from the Insurance Information Institute's which gives a great synopsis of a basic homeowner policy. Along with the coverages mentioned below, most companies also have package enhancements that broaden the coverages for the building AND your personal property. Be sure to contact us at 978-352-8000 to find out what enhancements may be available to you or if you have any questions.
Homeowners Insurance Coverage
A standard MA homeowners insurance policy includes four essential types of coverage. They include:
- Coverage for the structure of your home
- Coverage for your personal belongings
- Liability protection
- Additional living expenses in the event you are temporarily unable to live in your home because of a covered loss
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 disaster listed in your policy. It will not pay for damage caused by a flood, earthquake or routine wear and tear. When purchasing coverage for the structure of your home, it is important to buy enough to rebuild your home.
Most standard policies also cover structures that are detached from your home such as a garage, shed, fence etc. Generally, these structures are covered for about 10% of the amount of insurance you have on the structure of your home.
2. Your personal belongings
Your furniture, clothes, dishes, decor, and other personal items are covered . Most companies provide coverage for 50% to 70% of the amount of insurance you have on the structure of your home. Your belongings are covered anywhere in the world.
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, rider or schedule and insure the item for the appraised value.
3. Liability protection
Personal Liability covers you against lawsuits for bodily injury or property damage that you or household members cause to other people. The liability portion of your policy also pays for both the cost of defending you in court and any court awards—up to the limit of your policy. You are also covered not just in your home, but anywhere in the world.
4. Additional living expenses or Loss of Use
This pays the additional costs of living away from home if you cannot live there due to damage from a covered loss. It covers hotel bills, restaurant meals and other expenses, over and above your customary living expenses, incurred while your home is being rebuilt or repaired. Keep in mind that the ALE coverage in your homeowners policy has limits, usually a percentage of the amount of coverage you have on your home, and some policies include a time limitation.
Home insurance protects your most important asset. Make sure that you have the right protection for the very best value. If you would like more information on protecting your home from catastrophic loss email our office at info [at] georgetowninsurance [dot] coom or complete our contact us form.