For most families, a home is the largest purchase they'll ever make, and protecting it is essential. Homeowners insurance helps cover the cost of repairing or rebuilding your home and replacing your belongings after covered events. Yet many homeowners aren't entirely sure what their policy includes — until they need to file a claim.
A standard homeowners policy typically includes several types of coverage. Dwelling coverage helps pay to repair or rebuild the structure of your home after covered damage, such as fire or certain storms. Other structures coverage applies to detached structures like a garage, shed or fence.
Protecting your belongings and liability
Personal property coverage helps replace your belongings — furniture, clothing, electronics and more — if they're damaged or stolen. Liability coverage protects you if someone is injured on your property or if you accidentally damage someone else's property. Additional living expenses coverage can help pay for temporary housing if your home becomes unlivable after a covered loss.
It's just as important to understand what standard policies usually don't cover. Flood damage and earthquake damage are commonly excluded and often require separate policies. Routine wear and tear, maintenance issues and certain types of water damage may also fall outside your coverage.
When choosing coverage limits, base your dwelling coverage on the estimated cost to rebuild your home rather than its market value. Consider whether your policy pays replacement cost or actual cash value for your belongings, since replacement cost coverage typically provides more complete protection.
Your deductible also matters. A higher deductible can lower your premium, but you'll pay more out of pocket when you file a claim. Choose an amount you could comfortably afford. Valuable items like jewelry or art may need additional coverage beyond your standard policy limits.
Review your coverage regularly
Renovations, new purchases and rising construction costs can all affect how much coverage you need. Reviewing your policy each year helps ensure your protection keeps pace with your home and your life. Bundling home and auto insurance may also help you save.
The insurance specialists at Finance Capital Guide can review your homeowners policy and compare options across carriers. Request a complimentary coverage review.
