Imagine filing a claim for damage to your home only to find out your insurance falls short of covering your loss. This is the reality for many people who discover too late that their home insurance is not enough to meet their needs. Our goal is to help you avoid unwanted surprises and determine which types and how much home insurance is enough for you. In this post, we will examine the various types of coverage available in two of the most frequently purchased policies – the HO-3 and HO-5.
Coverage A – Dwelling
Ask anyone who has ever lost a home to a storm, fire, or another disaster, and they’ll tell you one important thing: Having adequate Dwelling coverage is essential. Without it, you risk coming up short of the money you’ll need to repair or rebuild your home. Not to mention, insurance companies can enforce the ‘Co-Insurance Rule,’ which penalizes your coverage for partial losses in case where your home is underinsured by more than an amount required by the policy.
To get an accurate estimate of your actual coverage needs, we recommend working with one of our team members. We use a Home Cost Estimator to calculate the cost to rebuild your home with same-quality materials in today’s construction costs. We exclude irrelevant factors, such as the value of your lot or the price you paid for your mortgage, but we include often overlooked expenses, such as debris clean-up.
Once you select your Dwelling coverage limits, you will select a deductible, which is the amount you are responsible for paying toward the cost of future claims. Keep in mind that a low, $500 deductible can reduce your cost burden, but a higher $2,000 deductible can significantly lower your annual premiums. Talk to an agent here at Reis Insurance for help determining which deductible is right for you.
Coverage B – Other Structures
Coverage B typically covers the additional structures on your property against the same types of hazards as Coverage A. Examples include:
- Detached garages
- Tool sheds
- Pole barns
- Swimming pools
- And more
Also, don’t forget to let an agent here at Reis Insurance know if you are making improvements to the outside of your property. Whether you are adding a pergola, extending your driveway, or finally installing the swimming pool you’ve always wanted, we recommend reviewing your Coverage B to ensure you remain adequately covered.
Coverage C – Personal Belongings
Coverage C is all about protecting the things you own, from the paper towel holder in your kitchen to the 65-inch TV in your living room. Many homeowners are surprised to discover the value of their belongings after a loss. It’s not just the big things, but the small things can add up too if you forget to claim them as a loss. That is why we recommend taking an inventory of your home to make declaring losses easier in the future. Several mobile apps are available to help you keep and update your inventory, as well as access it in a time of need.
Insurance companies typically insure home contents as a percentage of the Dwelling coverage – usually between 50 and 80 percent. However, you can schedule additional coverage for high-value possessions, as Coverage C typically imposes dollar limits on certain categories of possessions.
Coverage D – Loss of Use
If you lose your home due to a covered event, your living expenses will likely rise while you find a temporary place to live. It can take weeks or even months to make necessary repairs or to rebuild your home after a fire or other major event. During that time, Coverage D can take care of excess costs due to displacement, usually with a limit up to 20 percent of your Dwelling coverage amount.
Continue reading part two of “How much home insurance is enough?”