When you review your homeowner's insurance coverage (as you should try to do on an annual basis), you might be confused about all the terms that are used. You may wonder whether you have enough coverage in a certain area. When you review your home insurance policy, note the following items and make sure that you are properly covered.
Most people think about the insurance that is provided on your actual dwelling when they think of homeowner's insurance. When you look over your insurance policy, check to see if you are insured for the market value, or for the replacement cost. If your house does get damaged and has to be replaced, you would have to abide by the current building code. This might make it more expensive to replace your house than the market value. Also, make sure that your home is insured for the proper level, as insurance and building costs change over time and it could make it more costly to insure your home. You may want to also consider extended replacement cost coverage. After a major disaster like a hurricane, building materials and labor cost more, which could also drive up the cost of replacing your home. Extended replacement cost coverage will help make sure that you get enough money to rebuild your home even under those circumstances.
Your homeowner's insurance coverage also covers the costs of items that you own. This includes furniture, appliances, clothing, toys, and anything else you own. You can get replacement value coverage for this area of your homeowner's insurance as well. If you have expensive paintings or other items that are of great value, make sure that your insurance company knows about them so they can make sure that it is insured properly. You may want to conduct an annual inventory of the items that you own, in order to make it easier if you ever have to make a claim.
Your homeowner's insurance will also include coverage for other structures on your property. If you have a detached garage, pool, shed, or other structure on your property, this would be covered in this part of your policy. You will generally be covered for a default value, but if your additional structures have excessive value, you want to make sure that this is reflected in your insurance policy.
Your insurance coverage will also include medical payments and personal liability. If someone trips over a toy and falls down the stairs, or your tree falls on top of a neighbor's house during a storm, these sections of your coverage will help you.
Loss of use coverage will help you if your house is damaged and you won't be able to live in your home until it gets repaired. Don't skimp on this part of the coverage. If you are unable to live in your home for six months while repairs are being made, you might not be able to afford a rent payment and your mortgage at the same time. Loss of use coverage pays for the additional living expenses that you will incur if you are unable to use your home for a period of time.
Not everything is covered by your standard policy. Flooding is not covered by a standard home insurance policy, and you will probably have to get insured by the National Flood Insurance Program. Screened porches and sinkholes are not always covered either. If you have a lot of value invested in collectibles, jewelry, or other items, you may have to have those items insured separately as well.