Homeowner’s insurance is one of life’s necessities, especially if you are one of many individuals with a mortgage. It is a package policy which is required by lenders in the loan process.
What does a policy include?
A standard policy will include four types of coverages:
- Property Damage Coverage
- Loss or Damage to Your Personal Belongings
- Personal Liability Coverage
- Additional Living Expenses (ALE)
Property damage coverage pays to repair or rebuild your home if it is damaged or destroyed by a covered peril such as fire, lightning and vandalism. Review your policy to see the full list of covered perils for your home. Flood, earthquake and poor maintenance are not covered perils in a homeowner’s policy and need to be purchased separately through an agent.
Clothes, jewelry, furniture and other personal items are covered if they are damaged, stolen or destroyed by a covered peril. This section also includes off-premises coverage; therefore, your items are covered anywhere in the world, unless you previously decided to opt-out of this coverage. In addition, items such as trees and shrubs are covered against certain perils, but only up to a specific dollar limit per item.
In today’s society, it is extremely important to protect yourself from being sued by others. Personal liability coverage protects you for damage or injuries caused by your or your household to others, including damage caused by your pets. A person does not have to be injured on your premises in order for the liability coverage to be activated, so if your dog bites your neighbor at the park, your insurance will pay their medical expenses up to the designated limit. It is important to note, this coverage does not cover medical expenses for you and your household, only to those who are injured by you. Also, be sure to review your policy and check for exclusions of certain dog breeds and animals in general. It is always a good idea to be aware of the coverage your current policy provides.
If your home is being rebuilt or repaired and you are unable to live in it, then your homeowner’s policy will reimburse you for rent/hotel expenses, restaurant meals and other incidental costs you incur while your home is inhabitable. The activated coverage is known as Additional Living Expenses. However, before ordering the filet mignon, know that most policies impose strict daily and total limits which can be increased for more premium.
What types of policies are available?
There are eight types of homeowner insurance policies in the United States. They are HO-1 – HO-8 and each offers various levels of protection based on your needs and type of residence (i.e. Condo, mobile home, multi-family). For instance, HO-3 is the most common policy for those who own their home and provides the broadest coverage. You can always call us to see which policy is best for your needs to make sure you are properly insured.
Different levels of coverage include:
There are three coverage options for a homeowner’s policy:
- Actual Cash Value- This policy pays to replace the home or possessions minus depreciation (i.e. how much items are currently worth, not how much you paid for them)
- Replacement Cost- This policy pays the cost of rebuilding or repairing the home or replacing possessions without a deduction for depreciation.
- Guaranteed (or extended) replacement cost/value: This is the most comprehensive option and provides a buffer for inflation. A guaranteed replacement cost pays for whatever it costs to repair or rebuild your home- even if it’s more than your policy limit. The extended coverage is different in that it has a ceiling which is typically 20-25% higher than the original limit you purchased on your policy.
Call Darryl Murphy Insurance at 225-698-6789 and let’s review your coverage together. We can make sure you are properly insured and covered if disaster ever strikes.