What Does Homeowner’s Insurance Cover? How Much Do You Need?

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If you are a homeowner or if you are looking to purchase a home, it is important to get familiar with the ins and outs of homeowner’s insurance.  Do you know what such insurance covers? Do you have any idea how much you need?  Read on to learn what you need to know before purchasing homeowner’s insurance for your home.

What types of coverage are there?

Standard homeowner’s insurance

This type of insurance helps you out when you have a mortgage to pay back and something happens to your home. If you have a fire, you are covered.

Flood insurance

Floods are not covered under standard homeowner’s insurance, but you can purchase flood insurance separately to protect your home. The National Flood Insurance Program will protect a home up to $250,000 for the structure and $100,000 for the furnishings. Should you have a home that is more expensive, there is excess flood insurance that you can purchase.

Earthquake insurance

If you live in an area that is prone to earthquakes, you can purchase earthquake insurance separately.

Not that many homeowners get additional disaster coverage for one reason or another. Even those in areas that are prone to floods shy away from purchasing flood insurance. In fact, statistics indicate that only about 12 percent of homeowners in flood-prone and earthquake areas actually purchase such insurance policies to protect them. Basically, they are hoping that such a natural disaster won’t happen to them, but hope doesn’t always do the trick.

Assess your needs

Most people understand that there is a chance their home could burn down, so they realize the significance of insurance for such, but many do not think other natural disasters can affect them. If you do happen to live in an area that has floods or earthquakes, you really ought to consider purchasing such insurance to cover your home in the case of a disaster. There are plenty of homeowners who thought they were exempt from a flood or earthquake or mistakenly thought their standard homeowners insurance covered for such and it didn’t. Asses your needs wisely and if you have any questions, don’t hesitate to call an insurance agent for clarification.

What does home owner’s insurance cover?

The majority of standard homeowner’s insurance policies cover your possessions, including things like art, jewelry, and collections.  For example, if you have a policy that provides $200,000 coverage, most likely your policy will cover up to 75% of that, so you’d have about $150,000 coverage for your possessions. Beware though that some policies will only cover the depreciated value of your possessions, so that nice big screen television that you got five years ago for $2,000 may only be worth half that price now.

Most items are covered under fire or theft under a standard policy, but beware that some items may not be covered if broken or if they simply disappear from the home or the auto. If you have items that are particularly valuable, you can purchase special coverage for such items.

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