Making Sure You Have the Right Coverage

When you purchase a home, you know that you have to get homeowner's insurance. Not only is it smart and protects you from disasters, it also is required by your lender. Many people just take whatever insurance their lender recommends. This is often not the best fit for you. You may need more coverage in certain areas, and less insurance coverage in other areas. There are six major areas that are covered in a home insurance policy. By understanding how you are covered, you can make sure that you have enough coverage.

The Dwelling

Most of us think about insuring the dwelling when we think of homeowner's insurance. This part of your insurance coverage protects the actual structure, the wiring, the plumbing, air conditioning, and built-in appliances. If you would leave it there when you move, it is probably covered by this portion of your home insurance policy.

Other Structures

If you have a detached garage, storage shed, swimming pool, sidewalk, or a patio, this part of your homeowner's insurance policy would cover it. These structures are attached to the land and would generally be left behind if you moved. Structures that are used for business purposes would not be insured under your personal homeowner's insurance.

Contents

You will want to make sure that the contents of your home are adequately insured. Clothes, furniture, electronics, and the things that you own are covered by this portion of your policy. Many policies have limits on the amount of jewelry, artwork, money, and electronic equipment that is covered, so if you think that you have something that is valuable that needs to be specially insured for, you may want to discuss a special endorsement with your insurance provider.

Loss of Use

If your house suffers a fire, flooding, or other disaster and you are unable to live in your home for an extended period of time, loss of use coverage will pay for any living expenses that go above and beyond the normal expenses that you have. For example, you may have to pay rent to live in a temporary house, while still paying for your mortgage. You may have to pay to eat out. Make sure that you have enough coverage in this area.

Personal Liability

If your child throws a baseball through a visitor's car window and accidentally breaks it while they are visiting you, you will be covered in a lawsuit with this type of coverage. Personal liability will cover lawsuits that result from any bodily injury or property damage that occurs at your home.

Medical Payments

If your grandma comes to visit, falls off your porch steps, and breaks her hip, medical payments will cover her. Any accidental injury will be covered by this type of coverage, and it doesn't matter who is at fault.

Optional Coverage

Depending on where you live and what your needs are, you may want to opt for several different types of optional coverage. The most common types of optional coverage are flood and earthquake insurance. Most flood insurance is covered through the National Flood Insurance Program. You may also want to pay for guaranteed replacement cost coverage, extended replacement cost coverage (which pays for additional replacement costs in situations where labor is scarce and the replacement cost has gone up, such as after a major disaster like a hurricane), coverage on your secondary residence, and credit card forgery insurance. You may also need to specially insure computers, antiques, or other items that go above the policy limits that the contents portion of your policy normally has.

Whatever the insurance coverage that you need, you will probably want to review your policy annually to make sure that you are still appropriately covered. It is also a good idea to take inventory of the things that you own, and update them on an annual basis.