By – Melissa Sauer, Director of Production
Buying a home?
Homeowners insurance is too often the last item on the checklist a home buyer considers on the very important list of purchasing must-haves. You know you’ll need insurance to cover your house, liability, and belongings, so let’s review the components! Homeowners insurance covers your dwelling, other structures, personal property, liability, and medical payments. With the right insurance, your home and possessions are adequately covered against theft, fire, and other unexpected occurrences.
Top 6 considerations in a Homeowners Insurance Policy:
1 – Dwelling Coverage
What is covered: this concerns the structure itself and pays to rebuild your home “like and kind”, meaning with similar materials and in a similar style, if it is damaged by a covered loss such as: fire, windstorm, hail, lightning, or vandalism.
How Much? The amount of dwelling coverage is the estimated cost to rebuild your home, not your market value. As your agent, we can review your home’s building details to help determine a proper amount for coverage and additional replacement cost coverage when needed. If you have a mortgage, your lender may also require certain dwelling coverage limits.
2 – Other Structures
What is covered: this portion of the policy covers a detached garage, shed or fence, and other eligible detached structures.
How Much? Most policies cover detached structures for about 10% of the dwelling coverage amount. Typically, this is quite adequate; however, if you have any custom-built structures on your property, you may want to consider increasing this percentage.
3 – Personal Property
What is covered: pick up your house, take off the roof and turn it over, then shake it…the items that fall out are considered personal property: furniture, clothing, and kitchen items, even your refrigerator, if they are damaged or destroyed by a covered loss.
How Much? Generally, homeowners insurance companies will set your personal property limit between 50% – 70% of your dwelling coverage. You will need to determine the total value of your possessions to decide whether this default amount is appropriate for your needs. A great way to help more accurately estimate your personal property coverage needs would be to take an inventory of everything you own, and assess the total value. We only recommend replacement cost for your personal property never depreciating or actual cost value.
Specialty items: antiques, high value jewelry or other collectibles may require a “rider” or endorsement to the policy to ensure correct replacement cost amounts for these special items.
4 – Loss of Use
What is covered: this part of the policy pays additional living expenses if you are not able to live in your home due to a covered loss.
How Much? Loss of use coverage is commonly based on the total dwelling coverage and calculated at about 20% – 30% of the dwelling coverage limit.
5 – Personal Liability
What is covered: protects you and your family members if you are sued for a list of reasons; If you or a household member are responsible for causing bodily injury or property damage to others, a social media post that is perceived as slander or liable…
How Much? The minimum we recommend in todays’ current climate is $500,000 in personal liability coverage, meaning the insurance company can pay up to that amount in total to injured persons per occurrence. If you feel you need more protection, higher limits of $1 million and up are available. You can also purchase an umbrella or excess liability policy if you think you need additional liability coverage. A suggested “rule of thumb” is that you should have enough liability insurance to cover the total value of your at-risk assets. Your vehicle, your home, bank accounts and some investments could be at risk if someone sues you and you do not have sufficient liability insurance.
6 – Medical Payments
What is covered: Pays medical bills for a guest that is accidentally hurt while on your property. If the bills submitted are higher than your policy limits, you are responsible for the remainder.
How Much? Many homeowners insurance policies provide a minimum amount of $1,000 coverage per person, we encourage the highest available amount the carrier offers, as it can help to prevent a lawsuit.
Keep in mind that homeowners insurance policies are not one size fits all, and you’ll want to understand what’s covered before you purchase one. As your agent, we can recommend additional coverage that you hadn’t considered to make sure your home, family and property are properly insured.
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