Introduction
Many home owners are often perplexed to find out that their home is not fully secured by their insurance policy from accidents/damages. Here are some factors to look into, in order to determine the right amount of coverage you may need for your house.
Step 1
Reviewing Your Home Insurance Policy
The first step in determine house safe your house is, is to review your home insurance policy. A standard home insurance policy will include liability and hazard insurance. Liability Insurance will cover your property from injuries that may occur to people while on your property or by members of your household, whether or not they were on your property at the time of the accident. Hazard Insurance will cover losses or physical damages that involve your property or possessions.
Step 2
Use the guidelines below to review the details and amounts of both hazard and liability coverage in your homeowners insurance policy, in order to determine how safe your house is.
Hazard Insurance
While hazard insurance will cover a long list of disasters and damages, it still doesn’t cover everything. Flooding and earthquakes are normally not covered in the policy. Most hazard policies will also exclude damages as a result of sewer backups, police activity, power outages, vermin, dry rot and mud slides. To ensure that your house is fully secure, you should consider buying additional coverage from your insurance company or others. The key is to select additional coverage for hazards that have a high probability of occurrence in your area, such as floods or earthquakes.
Step 3
Types of Coverage
In case of an accident, the total cost of rebuilding your house is very much dependent on the type of coverage you select on your home insurance policy. The types of coverage you can select include:
Step 4
Replacement Cost Coverage: this type of coverage should ideally cover the total cost of rebuilding your house. However, under a standard policy the replacement cost coverage will stipulate a set dollar figure, as the amount that you will receive in the event of an accident. This amount could be well off the mark if cost of rebuilding your house is higher.
Step 5
Guaranteed Replacement Cover: They are hard to find, but insurance policies that pay 100% for your repairs or building costs without limits do exist. This is the ideal policy to obtain to ensure your house is totally secure from damages.
Tips
Cash Value Coverage: it will cover the house replacement cost minus any depreciation or wear and tear that it’s suffered since being rebuilt. This can be disadvantageous if the cost of rebuilding your house is higher than the current valuation of your house.
Sources and Citations
Liability Insurance
This type insurance is designed to ensure your house is covered to compensate for two things: personal liability and medical payments. Personal liability insurance will cover the legal fees and any amount that you are fined by a court, to pay someone who was injured on your property or whose property was damaged by someone in your household. Medical payments insurance will cover the medical bills for anyone who was accidentally injured while they were on your property.
