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The
Basic Coverages
While policies may vary slightly from company to
company, the standard homeowners policy provides the following coverages:
Dwelling (Your home and garage)
Other Structures on your premises
Personal Property
Additional living expenses/Loss of Use
Liability (Damage or injury caused to others)
Legal defense & Court Awards
With every coverage, there are maximum limits and a
deductible which apply.
Your
Home
Your homeowners policy pays for losses to your
home due to the kinds of perils (causes of loss) listed in the policy, or those
losses which are not specifically excluded.
Typical causes of loss and damage are fire, smoke, windstorm, vandalism,
malicious mischief and, glass breakage.
Less likely causes of loss are riot, civil comotion, falling aircraft,
lightning, explosion and volcanic eruption.
Some policies cover bursting of frozen pipes, damage fro weight of ice or snow,
scorching of countertops, and even carpets ruined by paint spills.
The perils that you are covered for depends on the specific type of policy that
you purchase. Generally, the broader the coverage, the more the policy covers.
Other Structures
This coverage is included in your homeowners
policy at no additional cost. The basic policy automatically provides coverage
for a limit of 10% of your dwelling limit. For example, if your home is insured
for $100,000, the limit of coverage automatically included for other structures
would be $10,000 (10%).
Other structures can be a detached garage, shed, or greenhouse. If needed, this
coverage can be increased, at an additional premium.
Other Structures are insured against the same perils as your home.
Personal
Property
Your policy automatically provides coverage for
your personal property, and those members of your family residing with you.
Personal property is defined as the contents of your home, such as furniture,
carpets, small appliances, clothing, patio furniture, and lawnmovers.
Homeowners policies do place a special limit on certain items such as jewelry,
watches, furs, silverware, fine arts, firearms, money, and securities.
Additional coverage can be added which will cover these items in the event of a
loss.
Loss of Use
If you are unable to live in your home due to a
fire or other covered loss, your homeowners policy will pay for lodging and food
costs over and above normal living expenses.
This coverage is again automatically included at a limit of 20% of your dwelling
limit. For example, if your home is insured for $100,000, your Loss of Use
policy limit would be $20,000.
Personal Liability
Your homeowners policy will pay up to the limit
of coverage, for acts which you or a member of your family can be held liable.
This would include payment to others for bodily injury, as well as property
damage.
In addition, if you are sued by another party for negligent acts, your
homeowners policy will also pay for your legal defense.
Medical Payments
Your homeowners policy also provides you with
medical payments coverage. Generally, there is a limit of $1,000 per person.
This coverage reimburses guests and even trespassers for their medical expenses
(up to the policy limit), for injuries they sustain on your property. It does
not mater who's at fault.
This coverage does not reimburse the policyholder, or any member or
resident of his family for any medical expenses they may have. This coverage
strickly applies to an individual who is a guest and not a resident your home.
Important Optional
Coverages
Replacement Cost Coverage for your Home
When this coverage is purchased, the
insurance company will pay the cost to replace your entire home, regardless of
the cost, and even if the cost to replace your home exceeds your policy limits.
Replacement Cost for your Personal Property
When this coverage is purchased, the insurance company will reimburse you
at today's cost to repair or replace your personal property, i.e. if a
television that you purchased 5 years ago for $400 is struck by lightning, the
company will reimburse you the cost to replace that item at today's prices. If
it costs $1,000 to replace that item today, you will be reimbursed that amount
less your deductible.
A homeowner who did not purchase this coverage would be reimbursed as follows:
The television would be depreciated, for example purposes let's use $50 per
year. This would bring the value of the television down to $150. If the
homeowner had a $100 deductible, then he would only be reimbursed $50 by the
insurance company.
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