Understanding your homeowners insurance policy

Understanding your homeowners insurance policy

Homeowners insurance coverage is designed to provide financial protection against loss due to disasters including flooding and vandalism, theft and accidents. But let’s take a step back and look at this type of insurance with a broader perspective, as many people out there may not even understand the spectrum of this coverage.

For the most part, a standard policy includes coverage for the structure of your home; for your personal belongs; liability protection; and coverage for additional living expenses. With that in mind, we’re going to run down just what exactly these are to give you a better idea why a homeowners insurance policy is so crucial!

Coverage for Your Home’s Structure

Your homeowners insurance policy can help cover those moments when you will need to repair or rebuild your home if it has been damaged or destroyed by flooding, fire, hail, lighting or other disasters that can wreak havoc. Many policies out there can also be adjusted to cover detached structures including your garage, gazebo or tool sheds.

Conversely, your standard policy does cover damage caused by floods, earthquakes or typical wear and tear. You will likely need a rider or a separate flood insurance policy with your provider, but if you live in a floodplain or a zone where hurricanes are a threat, this is highly recommended. While hurricanes aren’t a threat here in Fort Wayne, Indiana, we’ve certainly had our share of floods. And with all of the housing development going on, your residence might be prone to flooding where it hadn’t been in the past.

Coverage for Your Personal Belongings

Your homeowners insurance policy will cover your personal effects if they are either stolen or destroyed due to insured disasters. This type of coverage is typically 50 to 70 percent of the insurance you already have on the structure of your home. There’s typically also fraud coverage in case you experience a situation where someone has used your credit cards without authorization.

Determining whether this amount is enough should be figured out by conducting an inventory. Like with almost every aspect of your insurance policy, there’s a dollar limit you can modify. If you own any expensive items such as jewelry, fine art, collectibles or furs, you will want to insure these items at their full value through a personal property endorsement or floater that is adjusted for its officially appraised value.

Liability Protection

Liability protection can also defend you against lawsuits when bodily injury or property damage that you, your family, or pets cause to others. Say, for example, you forgot to clean up that spill and someone slips and falls, hurting themselves – you are covered. This portion of your policy will pay for both the expenses from defending yourself in court and any awards through the legal proceedings, but only up to the amount stated in your policy.

Much like your personal belonging coverage, if you own significant assets and desire a higher amount of coverage that isn’t available through your homeowners insurance, consider an umbrella or excess liability policy which offers higher liability limits among other benefits. Finally, your policy provides no-fault medical coverage in case a friend or neighbor is injured in your home. If that happens, they can submit their medical bills to your insurance company and the expenses will be covered without a liability claim coming into the picture. Unfortunately, it does not cover your family members or your pets if you own any.

Understanding the types of protection of your homeowners policy can go a long way towards preventing future losses. Broken down to its most basic form, it is meant to distribute the risk, so you won’t have to feel the full effects of a loss. With all its different applications, knowing how it works will also help you save money on the best policy for you! Feel free to call the Fort Wayne office of Myers & Hayden Insurance and speak to our homeowners insurance advisors with any questions at 260-486-5255.