A standard home policy includes four essential types of coverage. They include:
- Coverage for the structure of your home.
- Coverage for your personal belongings.
- Liability protection for injuries and damage you cause to other people.
- Additional living expenses in the event you are temporarily unable to live in your home because of a fire or other insured disaster.
Calculating your coverage
First, do not try to save on premium costs by shortchanging your coverage. This is the primary reason homeowners find themselves without enough coverage when they need it. Increasing your deductible is a better way to manage your premium costs.
Coverage for the structure of your home.
This should be based on current market costs for materials and labor to rebuild your home in the event of a total loss. Do not confuse this amount with assessment values, new home prices, appraised value, or current real estate prices for comparable homes. Review your coverages periodically to make sure it is keeping up with costs for rebuilding. If you add on to your home or make significant improvements, make sure to take those into consideration and adjust your coverage.
Coverage for personal belongings.
This includes everything inside your home. Use a home inventory checklist, take pictures or video to help you keep track and verify the make and condition. Keep a copy of the inventory off site.
Consider purchasing additional coverage for high-value items such as jewelry, art, and antiques to ensure you have ample coverage for your other personal property
Liability coverage protects you from claims resulting from injuries and damage you cause to other people. This coverage is intended to protect you on and off your premises. For example, someone steps in a hole in your yard, breaks an ankle, or your runaway grocery cart runs into another car or knocks someone down, causing injury.
Additional living expenses
This coverage pays expenses that you might incur if you are forced out of your home because of a covered loss such as fire. Typical expenses include hotel costs, rent, food, or travel.