What Should You Include in Home Insurance?
Home insurance is a way of protecting yourself financially in case of a disaster. Having the right home insurance can replace valuable items if they are stolen, destroyed, or damaged. There are also some items in a home that have to be listed separately. So, knowing what to include in your home insurance can be a tricky thing to know.
Most standard home insurance policies include cover for property and content damage. The basics of this are if your home is destroyed by a fire, flood, or if thieves break in. However, if you live in areas prone to hurricanes, earthquakes, or tornadoes, you may have to pay an extra premium.
Remember, if you have a rental property, your landlord’s insurance may not cover your personal items that are damaged or destroyed.
What is Included in Home Insurance?
Your standard home insurance policy should provide money to repair damage to your home or even rebuild your home if necessary. You have to check the small print to see if you need to insure separately other buildings such as garages, sheds, or other freestanding structures.
The other important aspect of standard insurance policies is to replace furniture, clothing, appliances, and other contents that may be destroyed. In some cases, your home insurance may provide cover for items that are damaged outside of your home – for example, while on holiday.
If you own very valuable items such as fine art, expensive jewelry, or other ‘non-standard’ items, you should get extra cover for these.
At part of your basic home insurance, you should also make sure and cover your personal liability. This means that if someone injures themselves on your property and sues you, you are covered for any medical or other liabilities. This even keeps you covered if your pet dog or cat injures another person.
Another important aspect is that your home insurance policy should include living expenses in case your home is damaged or destroyed. This means that your insurance company will pay for hotel accommodation, meals, and other costs involved while your home is being repaired.
However, before you book a 5-star hotel and start eating in a fancy restaurant, you should check the daily limits you are allowed.
Different Types of Coverage
When choosing the perfect insurance policy for your needs, you also should pay attention to what is replaced. There are 3 levels of coverage:
The actual cash value only gives you the equivalent cash value for what the item would be currently worth. So, depreciation is taken into account and you won’t get back what you paid for them.
Guaranteed replacement cost guarantees that your home is rebuilt or repaired even if the new value exceeds your policy limit. Remember that rebuilding your home will probably cost more than its value.
Replacement cost is the most secure type of insurance because it means you get the value of your items without depreciation being taken into account. So, if your old large flat-screen TV was destroyed in a fire, you will get enough cash to buy a new one at current prices, not the price of what your old flat-screen TV would be worth now.