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A standard homeowners insurance policy includes four types of coverage:
Coverage A - Structure of your Home
This part of your policy pays to repair or rebuild your home for damage caused by most common risks. Typically damage caused by fire, wind, hail, or lightning is covered under this part of the policy. Insurance for flood, earthquake, and water and sewer backup damage must be purchased separately.
Coverage B - Other Structures
Most standard policies also cover structures that are detached from your home such as a garage, tool shed, or gazebo. Generally these structures are covered for about 10-20 percent of the amount of insurance you have on the structure of your home.
Coverage C - Personal Property
Whether the contents of your house — furniture, clothing and other items — are stolen or destroyed in an insured disaster such as a fire, they are covered under this part of the policy. Most companies provide coverage for about 50-75 percent of the amount of insurance you have on the structure of your home.
Conduct a home inventory to determine if that’s enough coverage for your personal belongings. Additionally, most homeowner's insurance policies contain internal sub-limits for such items as guns, furs and silverware that can limit the amount of recovery.
Coverage D - Additional Living Expenses (aka - Loss of Use)
If the damage from a fire, storm or other insured peril forces you out of your home, this part of the policy covers the expenses in addition to “normal” living expenses incurred while your home is being repaired and/or rebuilt.
Coverage E - Liability Protection
Liability protection covers you against claims or lawsuits for bodily injury or property damage that you or your family members negligently cause to other people or property. It also pays for injury or damage caused by pets.
Coverage F - Medical Payments
Your policy also provides medical coverage. In the event a friend or neighbor is injured in your home, he or she can submit the medical bills to your insurance company. Expenses are paid without the injured party filing a liability claim against you.
Renters Insurance
Renters Insurance has several of the same components of coverage as a standard homeowners policy. Coverage's C, D, E, & F are included. Renters insurance is extremely inexpensive to compared to the coverage it provides. Many renters assume that landlord or apartment complexes are liable for reimbursement for losses due to storms, theft or other perils. This is not the case. It is the individual renters responsibility to insure their valuable items.
Additional Homeowners Insurance Coverage Options
- Replacement cost. The policy pays the cost of rebuilding or repairing your home, or replacing your possessions without a deduction for depreciation.
- Sewer or drain water back-up. This insures your property for damage caused by the back-up of sewers or drains. Water back-up may not always be included in a policy.
- Umbrella or personal catastrophe liability. This is an option to add more liability protection and broader coverage to your standard home owner's insurance policy.
- Earthquake insurance. Homeowners policies do not typically include earthquake insurance, but it can be purchased as an optional endorsement.
- Flood insurance. Like earthquake insurance, flood insurance is excluded from most homeowners' policies and must be purchased separately through the National Flood Insurance Program.
- Coverage for valuables. If you own expensive jewelry, electronic equipment or collectibles, you may want to purchase additional coverage such as an inland marine policy. Although these items are protected by your policy, coverage for theft or loss is limited.
- Identity protection. Identity Recovery Coverage is designed to help you restore your credit in the event of identity theft.
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