What Home Insurance Cover

Home insurance is an essential part of your financial plan. It protects you and your family from the unexpected, including fire damage to your home or other property, theft of personal belongings, medical expenses for injuries sustained in a covered event, liability claims against you arising out of accidents on your premises, and more. Homeowners can also save money by purchasing additional coverage that may be available through their homeowners’ policy.

What does it cover?

Your homeowner’s policy covers many things:

• Fire Damage

If your house catches fire, your insurer will pay up to $250,000 toward repairs. This amount could increase if there are exceptional circumstances such as faulty wiring or arson. Your insurer might require proof of loss before paying this claim. The deductible varies depending upon how much coverage you have purchased with your policy. For example, most procedures include a $500-1,000 deductible per occurrence. You’ll need to decide whether you want to keep this level of protection at all times or only when needed.

• Theft Coverage

A burglary occurs every 15 seconds somewhere in America. Most insurers offer some form of theft coverage. Some policies provide total replacement cost, while others limit recovery to the actual cash value. ACV means what your item would sell for after being repaired. In addition, some policies allow you to purchase optional extended warranty coverage. Extended warranties protect items like appliances, electronics, furniture, jewelry, artwork, etc., beyond the manufacturer’s original guarantee period. They typically last one year but can extend to five years or longer.

• Liability Insurance

Many people don’t realize they’re responsible for any injury caused by someone else who uses their property. Even though you own the land where your home sits, you still must maintain common areas and ensure that those areas are safe. When these responsibilities aren’t met, you become liable for damages resulting from negligence. Liability insurance provides compensation for bodily injury and property damage due to negligent acts committed by another person.

• Medical Payments

If someone suffers severe illness or injury because of your carelessness, your insurer pays for reasonable treatment costs incurred during the first three months following the accident. Afterward, you’re expected to pay 100 percent of the charges until you reach your maximum benefit under the policy.

Bottom line

Home insurance helps protect your assets and finances should something happen to them. But remember, not everyone needs comprehensive coverage. Talk to your agent about which type of policy best fits your situation.