Shopping around for home insurance can be confusing if you don’t know what exactly you’re shopping for. Here are some of the most common home insurance coverages that you should know about before deciding on who will cover the safety of your home in case of an emergency.
Property damage coverage helps pay for damage to your home and personal property. Other structures, such as a detached garage, a tool shed, and any other building on your property are usually covered for 10% of the amount of coverage on your house.
Personal property coverage will pay for personal property, including household furniture, clothing, and other personal belongings. The amount of insurance coverage is usually 50% of the policy limit on your dwelling. The coverage is also limited by the types of loss listed in the policy. The coverage only pays the current cash value of the item destroyed, unless you purchase “replacement cost” coverage. Your homeowner’s policy also provides off-premises coverage. This means that the policy covers your belongings against theft even when they are not inside your home.
Homeowners’ policies provide personal liability coverage that applies to non-auto accidents on and off your property if the injury or damage is caused by you, a member of your family, or your pet. The liability coverage in your policy pays both for the cost of defending you and paying for any damages that a court rules you must pay. Liability insurance does not have a deductible that you must meet before your insurer begins to pay losses. The basic liability coverage is usually $100,000 for each occurence. You can request higher limits that are available for an additional cost.
Medical payment coverage pays if someone outside your family is injured at your home, regardless of fault. This includes payment for reasonable medical expenses incurred within one year from the date of loss for a person who is injured in an accident in your home. The coverage does not apply to you and members of your household. The medical-payments portion of your homeowner’s policy will also pay if you are involved in the injury of another person away from your home in some limited circumstances. Medical payments coverage limits are generally $1,000 for each person.
If it is necessary for you to move into a motel or apartment temporarily because of damage caused by a peril covered in your policy, your insurance company will pay an amount up to 20% of the policy limit on your dwelling for these expenses. If you move in temporarily with a friend or relative and do not have any extra expenses, you will not be paid any addditional living expenses by your insurance company.
If you operate a home business full- or part-time, you might be uninsured and not realize it. Many home business owners believe that their homeowner’s insurance policy covers all of their home business needs. You should not assume that your homeowner’s insurance policy will cover your home business. Your homeowner’s policy may provide coverage, but probably only a maximum of $2,500 for business equipment in the home, and $250 away from the premises.