Home Owners Insurance
What should your home owners insurance cover? That is up to you but your policy should meet these minimums. For more detailed information on understanding home owners insurance policies , I found the following website extremely helpful www.insurance.com.
All policies have these coverages included but to what extent... how much do you need?
- Coverage A- Dwelling
- Coverage B- Other Structures on Your Property
- Coverage C- Personal Property/Contents
- Coverage D- Loss of Use
- Coverage E- Personal Liability Protection
- Coverage F- Medical Payments
What does that cover??
Coverage A - Dwelling: The coverage should be enough to cover the cost of rebuilding your home in the event of a complete loss.
Replacement Coverage vs Actual Cash Value
The replacement cost of your home is how much it would cost to replace your home and its contents with new materials at current prices in the event of a loss. Actual cash value (ACV) is the value of your property at the time of a loss. ACV may be determined as the replacement cost minus depreciation. You want replacement cost !! No exceptions! You want what it would cost for you to put your house back brand new and no less.
Coverage B - Other Structures: This is the portion of your home insurance policy that covers the cost of rebuilding/repairing the additional structures on your property other than your home. This includes detached garages, sheds, and other detached buildings, walk ways and patios. Typically, a standard home insurance policy will provide 10% of the total dwelling coverage as coverage for additional structures.
Coverage C - Personal Property: Typically a home insurance policy will provide 50%-70% of your dwelling coverage towards contents/personal belonging coverage. However, you might decide to purchase more depending on the value of the personal belongings in your home. Again you want full replacement coverage! You want what it would cost to go out and replace that item at today's price. No exceptions!
Coverage D - Loss of Use: Loss of use coverage reimburses you for hotel, restaurant and other living expenses you may incur as a result of your home being uninhabitable. The purpose of this coverage is to help you maintain your standard of living in the event of a disaster.Most standard home insurance policies will provide coverage up to 20% of the dwelling coverage. You are entitled to be displaced to a location that is equal to that which you are living....not the extended stay up the street or the apartment 1/4 the size you are used to.
Coverage E - Personal Liability: This is the section of a standard home insurance policy that protects you or covered family members against lawsuits. This type of insurance coverage would protect you in the various examples of situations where a lawsuit is presented like your mail man falling on your porch.
Standard home insurance policies will typically include a minimum of $100,000 for each liability claim occurrence.
Coverage F - Medical Payments: commonly referred to as MedPay, is the section of a standard home insurance policy that will cover medical costs in the event that someone is injured on your property and does not want to sue you. When someone is injured on your property and does not want to sue you for the damages, you can use MedPay to help cover medical costs. MedPay would cover injuries sustained on your property when a lawsuit is not present.Typical MedPay coverage will cover $1,000 per injured person.