Homeowners insurance is made up of a lot of different coverages. So, let’s just talk about the what the basic coverages are.
Dwelling Coverage - The main coverage is the dwelling coverage. Dwelling means your “residence premises” and includes any structures attached to the dwelling. This coverage will determine the amount you will receive in the event of a total loss, however, it also effects all the other coverages your homeowners insurance provides.
The amount for each of the other basic coverages on your homeowners insurance policy are a percentage of your dwelling coverage amount.
Other Structures – This is for any building on the covered premises that are not attached to the house. This would cover anything from a small backyard shed or detached garage to a large barn or personal shop. There is no limit to the amount of structures it will cover, however, there is limit to the amount of money that will be covered. The basic coverage on all homeowners insurance policies is 10% of the dwelling coverage. This does not take away any money available to cover the home. It just gives a starting point for the amount of coverage for other structures. If you have any detached structures be sure and talk with your agent to make sure that you have enough coverage to rebuild those buildings should there be a total loss. While every company does it differently, you can purchase increased coverage for your other structures.
Personal Property – If your home was destroyed by a fire or another devastating event and the only thing you were able to get out of the house with was your family and the clothes you were wearing when you ran out, you would want to know that you had the right amount of coverage to replace everything in your home. While every insurance company has a different minimum, this is also a percentage of what your dwelling coverage is. Some companies will allow you to increase your personal property coverage. Talk with your agent to find out what your coverage is and what your options are to increase your coverage.
Remember, it’s not about what your current belongings are worth now. You need enough coverage to replace everything you own at today’s prices.
The most important questions to ask your insurance agent is do you have replacement cost on your policy. You could have actual cash value or ACV on your dwelling, your roof or your personal belongings. That could end up costing you BIG should there ever be a claim. Actual Cash Value on your roof means that the adjuster will determine what the actual value of the roof based on the age of it. This means that the amount of money the insurance company pays you could be far less than the what the actual cost to replace your roof would be. Always talk to your agent about your options for Replacement Cost Coverage. This will make sure that you will get your roof replaced minus your deductible as well as getting money to replace your belongings without having to prove what each item you lost was worth at the time of the loss.
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