Whether you are buying home insurance for the first time or looking to renew your policy, knowing the basics of what your home insurance policy covers can help you choose the right insurance plan. Let’s take a look at what standard home insurance policies cover and what your options are if you would like to enhance this coverage.
Types of Coverage Offered by Homeowners Insurance
- Dwelling coverage: This part of your policy covers the cost of rebuilding or repairing your home if it is destroyed or damaged, based on the coverage amount you select. Keep in mind that your policy will only cover the rebuilding cost if you opt for adequate coverage, which may be different from the current market value of the home.
- Personal belongings coverage: Apart from your home, your policy also covers your personal belongings and assets. These could include jewelry, clothing, and furniture, among other things. Homeowners insurance policies usually limit how much you claim for loss or damage of your personal belongings.
- Liability insurance: Liability insurance protects you if you are responsible for injuring a third-party or causing property damage. Your policy will also cover any legal costs that you may have to incur as a result of the incident.
Optional Insurance Coverage
Although standard homeowners insurance policies offer comprehensive coverage, they don’t cover all incidents. If you need additional coverage, you could buy certain optional policies, like the ones mentioned below, along with your home insurance cover.
- Flood Insurance: Standard homeowners insurance policies do not cover damages or losses to your home and belongings due to floods. So, if you live in a flood-prone area, consider getting additional flood insurance.
- Earthquake Insurance: Earthquake insurance is an optional insurance policy that will protect you from incurring out-of-pocket expenses if your home and possessions are damaged due to an earthquake.
- Valuables Coverage: While valuables are covered by standard home insurance policies, you may find that the coverage is limited. If you want increased protection, you can opt for additional insurance.
While add-ons can increase the cost of your policy, it’s smart to be adequately insured, rather than have to pay for expenses out of your pocket in case of damages to your home.
