When moving into a new home, it is good to understand what’s included in your homeowner’s insurance. As a new homeowner or an existing homeowner that’s relocating, you are faced with the decision of having a standard policy or add riders for extra protection. Knowing the basics on what is automatically covered and what isn’t covered is key. If you have a condominium or a renter’s policy, you should know the differences as well.
These are the basic provisions in a standard homeowner’s insurance policy:
- Property insurance
- Personal liability
Standard homeowner’s insurance policies are usually referred to as HO-3, based on the form in which the policy is written. HO-2 is a cheaper homeowner’s policy, and an HO-1 is the minimum you can possibly have. HO-6 is for condominiums, and HO-4 is a renter’s insurance policy.
The HO-3 (standard) covers structural damage and personal property damage caused by a variety of things such as theft, snow, minor water damage, falling objects, smoke, fires and windstorm occurrences. In the event something happens and you have to place your possessions into a self-storage facility, chances are that the coverage extends to those items.
The personal liability clause covers the liability in the event someone gets hurt on your property, or someone in your family has an accident on your property. Having this insurance is very important and can protect you in the event of a lawsuit.
You should research your policy to see what is not covered. Generally, flood insurance is not included unless you live in a flood zone, at which time the mortgage company will usually require it as part of your policy. Earthquakes are also not covered, so if you live in an area that is known to have earthquakes, you may want to add this to your general policy.
Understand that if you have to exercise your policy, your items will be covered for their value and not what you paid for them. If you have recently bought items, having receipts available can get you more money in your settlement. If you have expensive items such as jewelry, paintings or other precious valuables, you want to get an addendum to your policy that will give you additional coverage. Your standard homeowner’s insurance carries a certain amount of coverage and won’t have enough of a threshold to cover the replacement value.
Living expenses in the event you have to move out while your home is being repaired may or may not be covered. In most instances, the coverage is not enough to cover an entire family’s expenses for an extended period of time. This will also be an added rider to your policy to make sure these things are covered. If you live in a flood zone or earthquake prone area, you want to be sure to get these additions in place.
Reading your policy thoroughly to know what type of coverage you have will allow you to make informed decisions moving forward in protecting your home and family.