Purchasing a home is an exciting milestone that also comes with the responsibility of protecting your investment. Having adequate homeowners insurance is essential to safeguard your property and possessions from unforeseen disasters. This guide will explain the key components of a standard insurance policy, recommended coverage limits, add-ons, and how to customize protection for your unique needs.
Overview of a Standard Homeowners Insurance Policy
A standard home insurance policy provides baseline coverage in these core areas:
- Dwelling coverage: Repairs or rebuilding costs for the structure/house itself
- Personal property coverage: Replacement cost for possessions inside the home
- Liability coverage: Protection if others are injured on your property
- Additional living expenses (ALE): Covers extra costs if temporarily displaced
While specific details can vary among insurance providers, this outlines typical coverage. However, more or less protection may be appropriate depending on your home’s value and individual circumstances.
Ensuring the Dwelling Structure
The section covering the physical dwelling is at the heart of any homeowners insurance policy. Dwelling coverage pays to repair or rebuild the house itself if damaged by covered events like fires, storms, lightning strikes, and more. It does not cover floods or normal “wear and tear” issues.
Recommend insuring dwelling at 80-100% of full replacement cost
- Determine accurate rebuilding cost by factoring in house size, materials, labor, code changes
- Set coverage limit high enough to completely reconstruct the home
- Limit for detached structures like garages typically 10% of the main dwelling limit
Protecting Personal Property Inside
Replacing all the possessions inside a home can end up costing as much or more than structural repairs. Personal property coverage reimburses you if items are stolen or destroyed by covered disasters. Provide an inventory with photos to verify ownership.
Recommended personal property coverage at 50% or more of the dwelling limit
- Factor in the total value of all appliances, furniture, electronics, clothing and everything inside
- Consider adding special limits for high-value categories like jewelry, art, equipment
- Choose suitable deductibles to balance premium costs
Understanding Liability Protection
The liability section covers you against bodily injury or property damage claims when someone else gets hurt or their belongings are damaged while on your property. Standard policies pay legal judgments up to policy limits, often $100,000.
Exclusions: Harm to your own home or family members
- Incidents caused by insured individuals or their property are typically excluded
- Consider adding higher liability limits or umbrella insurance for more adequate protection from lawsuits
- Options exist to expand liability scope to cover defamation, invasion of privacy, and other personal injury
Providing for Additional Living Expenses
If your home becomes unlivable due to a covered loss, additional living expenses (ALE) coverage allows you to maintain your lifestyle while displaced. It pays costs associated with interim accommodations and dining during repairs.
ALE coverage has separate policy limits
- Track all temporary housing, restaurant, travel, and storage expenses
- Can also cover lost rental income if part of the house was rented out
- Limits based on specified dollar amount and/or time period necessary for repairs
Customizing Your Homeowners Insurance Policy
While standard policies provide baseline protection, every homeowner has unique exposure risks and coverage needs. Key options for customization include:
Insurance Riders: Add-ons that expand or extend existing coverage
Flood Insurance: Separate policy to cover flood damage if at high risk
Jewelry Insurance: Extra protection for expensive jewelry, watches, furs
Equipment Breakdown: Covers electrical/mechanical failure
Water Back Up: Adds coverage for sewer/drain backups
Securing suitable homeowner insurance coverage is essential to fully protect your dwelling and possessions. Mountain Plains Agency simplifies the process through transparent guidance and recommendations customized for your situation. To discuss your home insurance needs, contact Mountain Plains Agency by clicking here to request a consultation. Our experts make getting the right homeowner’s policy effortless so you can properly safeguard your most valuable assets.
