After Monday’s hailstorm did extensive damage across Metro Denver, damaging shops and homes, and causing car accidents, many people are making calls to their insurance providers. If a disaster happened to your home, do you know, for sure, that you’re adequately covered?
Here’s a rundown of Property Insurance Basics you need to know:
- You don’t have to own your home to need insurance. Many landlords require renters insurance, and a minimal investment in rental coverage can offer a lot of coverage, in case an incident occurs. If your apartment building burns down with all your stuff inside, renters insurance can help you replace your property, as an example.
- Standard home owner’s insurance policies cover the following: Interior or Exterior Damage due to weather, fire, vandalism or other covered disasters. You’ll be compensated so your home can be repaired or, if necessary, rebuilt. Flood and earthquake insurance require additional, specialty coverage. Garages, sheds or any structures not directly connected to your home, will require an addendum in order to be covered. Loss or damage to your personal property, including clothing, furniture, appliances and most of the other contents of your home, assuming the damage occurs as part of a covered disaster. According to the Insurance Information Institute, most insurance companies will provide coverage for 50–70% of the amount of insurance you have on the structure of your home. If you own high value jewelry, antiques or electronics, you will want to provide documentation of these items to your insurance company prior to the need for a claim.
Personal liability for damage or injuries caused by you or your family. Liability coverage protects you from lawsuits filed by others, including pet issues. Insurance experts recommend having at least $300k worth of coverage, according to the Insurance Information Institute.
Hotel or house rental while your home is repaired. This type of insurance coverage is known as additional living expenses (ALE). ALE reimburses you for rent, hotel room, restaurant meals and other costs you incur while waiting for your home to become habitable again.
- Different types of coverage include: Actual Cash Coverage (the current value of your home and its contents, minus depreciation); Replacement Coverage (actual cash value without subtracting depreciation); Guaranteed Replacement Cost (comprehensive coverage for the actual replacement cost of your home and personal property – including inflation).
- What ISN’T included? Natural disasters, acts of God, acts of war
- How much does it cost? The average yearly premium cost for U.S. homeowners insurance in 2013 (the latest year for which data is available) was $1,096, according to a 2016 report by the National Association of Insurance Commissioners, but premiums vary widely and depend on multiple factors, including your state. Price will of course be determined by how much coverage you buy, a decision you can only make after evaluating the market value of your house, completing a household inventory, and deciding how much liability protection you want.Other variables include your zip code. If you live in a high-crime area, for example, insurance premiums will be higher. Companies also take into account the size of your house, how close it is to a fire hydrant, the condition of your plumbing, heating and electrical systems, how many claims were filed against the home you’re seeking to insure, and even details like your credit score that reflect on how responsible a consumer – and, therefore, a homeowner – you are.
Shop around and do your research when it comes to homeowner’s insurance coverage. Ask questions like, “If a sprinkler head breaks in the yard and my basement floods, will I be covered?” You might be surprised by the answer, and you don’t want to be caught off guard. This exact scenario happened to a friend of mine, and the insurance company denied the claim because the sprinkler head was outside the home, and not, in their view, technically attached to the property.
Stay tuned for a discussion of ways to save on your insurance coverage!