Homeowners insurance is a must for all homeowners. As you might imagine, there are several items that are covered under a typical policy. For instance, most insurance policies will cover:
- Fire
- Theft
- Vandalism
- Falling objects
- Heater or cooling system explosion
- Water pipe failure
- Artificially generated electrical current
- Riots
Homeowners insurance policies will never cover bodily injury or property damage intentionally caused by the insured. Business property is not typically covered by a homeowners insurance policy, and additional insurance might have to be purchased to cover a business that is operated out of a home.
In general, most homeowners insurance policies will cover your dwelling, personal property, and you if you are found responsible for an injury that occurs on your property. Each policy is different, and insurance companies have exceptions or carveouts for policyholders depending on where they live. Windstorm damage is something that may be excluded depending on how far you reside from a coastline or seashore. Recurring natural disasters such as earthquakes may not be covered by any insurance company, but coverage may be purchased through government agencies. In California, residents can purchase earthquake insurance from the California Earthquake Authority (CEA). If your home is located in a flood plain, you can purchase insurance through the National Flood Insurance Program, which is administered by the Federal Emergency Management Agency (FEMA).
Homeowners insurance policies provide basic coverage that may not cover the full price of replacing your home or your personal belongings. In the event that your personal belongings exceed the per-item limit of a policy, you might be eligible to purchase more coverage. Most insurance companies will offer additional policies known as a rider. A rider will cover high-end items like jewelry, audiovisual equipment, fine art, antiques, and Persian rugs. Other optional insurance policies, such as guaranteed replacement cost, inflation guard, and even credit card forgery and depositors forgery coverage, may be added to an existing homeowners insurance policy.
It is important to insure your home for at least 100% of the estimated replacement cost to rebuild your home using today’s market price. Inflation can cause your homeowners insurance policy to provide inadequate coverage. It is vital to review your policy annually to ensure that your property’s value reflects the current market conditions in the event that your home must be rebuilt. Anytime improvements are made to a property, such as a kitchen remodel, the homeowners insurance policy should be reviewed to ensure adequate coverage.
