What You Need To Know About Home Insurance
New York Times:
Your home is probably your largest and most important investment — not to mention that it’s also the roof over your head. Here’s how to make sure you get the right coverage. While plans may vary from insurer to insurer, a standard homeowner’s policy generally has four components.
* Coverage For The Structure – This is the most important aspect of any policy. It covers damage to your house from fire, storms and other disasters (see exceptions below). It’s wise to insure your home for 100 percent of what it would cost to rebuild it. If destruction is complete — if, for example, your home burns to the ground — you will then have adequate funds. To determine what that amount would be, hire a local builder who can give you an estimate. Or figure it out yourself by using the free calculator at Building-Cost.net. A basic policy will insure your home against major disasters, except for flood, earthquake, war or nuclear accident. (For flood and other coverage, see below.) In addition, it will cover other structures on your property like a separate garage or shed. Some companies cover you at just 10 percent of the value of the structure of your home.
* Coverage For Contents – Most plans will also cover the cost of replacing your personal belongings if they are stolen or lost in a fire or other insured disaster. The standard coverage limit is equal to 50 percent of the value of the structure of your home. So if you have determined that it will cost $200,000 to replace your home, then you could have about $100,000 of insurance coverage on your personal belongings. To make sure this is adequate, make a detailed list of the contents of your home, including furniture, clothing, tools and appliances. Or use the Insurance Information Institute’s free home inventory software, which you can download at knowyourstuff.org. It’s also smart to take pictures of all your valuables and save them in a safe deposit box or fireproof box — doing so will make filing a claim much simpler. Most companies provide off-premises coverage as well, meaning that your belongings will be covered anywhere in the world. So if your camera is stolen while you’re on vacation, you can file a claim for reimbursement. Some companies limit the amount to 10 percent of the total coverage you have on your possessions. You will also probably have up to $500 of coverage for unauthorized use of your credit cards.
* Liability Protection – A standard policy covers you in three ways. It covers damage to other people’s property. If your son accidentally throws a ball through your neighbor’s window, your policy will cover the cost of the damages. Read on…
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