A lot of property owners deal with their homeowners insurance much like that old rotisserie infomercial: Set it and forget it. But when it comes down to filing a claim, you should already know what’s covered and what’s not.
Most standard homeowners policies have four coverages: the structure of your home, your personal belongings, liability protection, and additional living expenses in the event you are temporarily unable to live in your home because of a fire or other insured disaster.
Structural coverage pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disaster listed in your policy. It will not pay for damage caused by a flood, earthquake or routine wear and tear. When purchasing coverage for the structure of your home, it is important to buy enough to rebuild your home.
Personal belongings coverage is for your furniture, clothes, sports equipment and other personal items in the event they are stolen or destroyed by fire, hurricane or other insured disaster. Most companies provide coverage for 50% to 70% of the amount of insurance you have on the structure of your home. So if you have $100,000 worth of insurance on the structure of your home, you would have between $50,000 to $70,000 worth of coverage for your belongings. The best way to determine if this is enough coverage is to conduct a home inventory.
Liability protection covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by your pets. So, if your son, daughter or dog accidentally ruins your neighbor’s expensive rug, you are covered. However, if they destroy your rug, you are not covered.
Additional living expenses pays the additional costs of living away from home if you cannot live there due to damage from a fire, storm or other insured disaster. It covers hotel bills, restaurant meals and other expenses, over and above your customary living expenses, incurred while your home is being rebuilt. Keep in mind that the ALE coverage in your homeowners policy has limits, usually a percentage of the amount of coverage you have on your home, and some policies include a time limitation. But the amount of ALE coverage is separate from the amount available to rebuild or repair your home.
It’s better to be safe than sorry. Sit down with your insurance professional and go over your coverages so you won’t be surprised at the worst possible time.