Last month you all heard the story of my house fire and the importance of having the proper homeowner’s insurance policy that will cover the things that you will need if your home burns. I have put together some things that may interest you when you are choosing your policies!
Homeowner’s insurance covers damage to the interior or exterior of your home.
In the event of damage due to fire, hurricanes, lightning, vandalism or other covered disasters, you will get compensated so your house can be repaired or even completely rebuilt.
Clothing, furniture, appliances, and most of the other contents of your home are covered if they’re destroyed in an insured disaster. You can even get “off-premises” coverage, so you could file a claim for lost jewelry, say, no matter where in the world you lost it. There may be a limit on the amount your insurer will reimburse you.
If your home would get destroyed by a flood, earthquake, or just poor home maintenance, then your home is generally not covered. For these items, you must purchase insurance on a separate policy.
Freestanding garages, sheds or other structures on the property may also need to be covered separately using the same guidelines as for the main house.
If you own a lot of high-priced possessions (fine art or antiques, fine jewelry, designer clothes), you might want to pay extra to put them on an itemized schedule, purchase a rider to cover them, or even buy a separate policy.
Now, my favorite policy that we had was the additional living expenses policy. It paid for either a hotel or house rental while our house was being rebuilt. It even paid for the furniture and appliances we rented during our wait. Without this, we would have had to impose on family or friends for the entire time it took to rebuild our home, which was approximately one year. I could not imagine anyone wanting us to even live with them for a few days, let alone a year! Especially when we had a 100-pound chow/shepherd mix dog!
There are three levels of coverages for homeowner’s policy.
Actual Cash Value
This covers the cost of the house plus the value of your belongings after deducting depreciation which is how much the items are currently worth, not how much you paid for them.
This policy covers the actual cash value of your home and possessions without the deduction for depreciation, so you would be able to repair or rebuild your home up to the original value.
Guaranteed (or extended) Replacement Cost/Value
This is the most comprehensive one. This inflation-buffer policy pays for whatever it costs to repair or rebuild your home—even if it’s more than your policy limit. You can also ask about an extended replacement, meaning it offers more coverage than you purchased, but there is a ceiling