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Your home is your castle. For many people it means insuring their largest asset. Homeowners insurance provides protection for you and your family for a multitude of both property and liability coverages in one package policy. There are different kinds of homeowners policies, and some insurance company policy forms are more comprehensive then others, but they all provide five essential types of coverage. They are:

1. Dwelling Coverage for the structure of your home and appurtenant structures

1. Personal Property Coverage for your personal belongings.

1. Loss of Use/ Additional Living Expenses in the event you are temporarily unable to live in your home because of a fire or other insured disaster.

1. Comprehensive Family Liability protection.

1. Medical Payments to others

*The coverage information outlined herein is a guideline only; refer to the actual policies for full terms, conditions, exclusions, and limitations

Definitions

1. Dwelling-The structure of your house & appurtenant structures

This part of your policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disaster listed in your policy. It will not pay for damage caused by a flood, earthquake or routine wear and tear. When purchasing coverage for the structure of your home, it is important to buy enough to rebuild your home or have a guaranteed replacement cost rider.

Most standard policies also cover structures that are detached from your home such as a garage, tool shed or gazebo. Generally, these structures are covered for about 10% of the amount of insurance you have on the structure of your home. .

2. Contents/Personal Property-Your personal belongings

Your furniture, clothes, and contents and other personal items are covered if they are stolen or destroyed by fire, windstorms, burst pipes, or other insured perils. Most companies provide coverage for 50% to 70% of the amount of insurance you have on the structure of your home. So if you have $500,000 worth of insurance on the structure of your home, you would have between $250,000 to $350,000 worth of coverage for your personal property. The best way to determine if this is enough coverage is to conduct a home inventory.

Expensive items like jewelry, furs, silverware, antiques, collectibles and fine arts are covered, but coverage is very limited. To insure these items to their full value, purchase a personal articles floater and insure each item for it’s appraised value.

3. Loss Of Use/ Additional Living Expenses

This pays the additional costs of living away from home if you can’t live in your home due to damage from a fire, storm or other insured peril. It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt. Coverage for additional living expenses differs from company to company. Many policies provide coverage for about 20% of the insurance on your house. You can increase this coverage for an additional premium. Some companies sell a policy that provides an unlimited amount of loss-of-use coverage, but for a limited amount of time.

If you rent out part of your house, this coverage also reimburses you for the rent that you would have collected from your tenant if your home had not been destroyed.

4. Comprehensive Family Liability Coverage

Liability provides coverage for you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by your pets.

The liability portion of your policy pays for both the cost of defending you in court and any court awards—up to the limit of your policy. You are also covered not just in your home, but anywhere in the country.

Liability limits range from $100,000 to $1,000,000. However, it is recommended that you maintain higher limits and have a personal umbrella as well. You can purchase an umbrella or excess liability policy which provides broader coverage, including claims against you for libel and slander, as well as higher liability limits. Generally, umbrella policies cost $200 to $350 for $1 million of additional liability protection.

5. Medical Payments. In the event a person is injured in your home or on your property, he or she can simply submit medical bills to your insurance company. This way, expenses are paid without a liability claim being filed against you. Limits are generally $1,000 to $5,000. It does not, however, pay the medical bills for your family or your pet.

Understanding the Value of Your Home

Understand the difference between market value and replacement cost

“Replacement cost” is the amount needed to repair the damage or to rebuild the home to its pre-loss condition. For insurance purposes, the replacement cost of a home is NOT the market value of the home, its purchase price or the outstanding amount of any mortgage loan. It does not include the value of the land, but is the cost of rebuilding your home.

Some important things to consider when determining your coverage amount:

• Your home’s estimated replacement cost is different than its market value (real estate cost).
• Each time you remodel or improve your home, you should adjust your coverage amount accordingly.
• If your home is made of unique building materials, make sure they are reflected in your replacement cost estimate.
• Stay abreast of the fluctuating building costs in your area and update your coverage amount accordingly. Make sure that you maintain coverage at 100% of your home’s estimated replacement cost at all times.
• It is important to review your coverage annually and inform us of any changes you’d like to make.

We can help you make the right choices of coverage and the right insurance carriers for the protection of you and your family. Discuss with us, other riders, amendments and credits that can be added to customize your Homeowners Insurance policy.

To get a quote, click here.

For information regarding Homeowners Insurance or other coverages that may not be listed, email us at info@mackoul.com