Are you Really Covered?

Whether you’ve just purchased a new home insurance policy or you haven’t shopped around in years- it’s always important to know whether you have enough coverage to really protect your home and family in the event of a claim. While you should always refer to the advice of a licensed insurance agent, you can easily check to see if you are properly covered by pulling out your policy and checking your coverages against the criteria below:

Dwelling Coverage: This is the type of coverage that protects the structure of your home against various perils such as fire, hail and wind damage. Your dwelling coverage should be high enough that you could replace your home in the event of a covered claim. A quick way to determine your dwelling coverage is to multiply the square footage of your home  by local building costs. Local building costs vary per region of the U.S. but you can find some estimates using this dwelling coverage calculator. Also to keep in consideration is the building grade of your home. For example, your replacement cost would be higher than average building costs in your area if your home has hardwood floors, granite counter tops and custom moldings.

Other Structures Coverage: This coverage protects detached structures on your property such as sheds and detached garages. It is calculated as a percentage of your Dwelling Coverage. For example, a home with $200,000 worth of dwelling coverage may have 10% of that coverage, or $20,000, in other structures coverage. Consider the other structures on your property to determine whether this amount is enough to rebuild them in the event they were lost in a covered claim.

Personal Property Coverage:This coverage is also calculated as a percentage of your dwelling coverage but is typically 50-70% of your dwelling coverage. So, a home with $200,000 worth of dwelling coverage would have about $100,000- $140,000 in personal property coverage. Personal Property Coverage is what pays for everything inside your home that is not permanently attached to the home structure. So, your electronics, clothing, jewelry, furniture, etc. Depending on the peril, your home insurance company will replace these items, however, it is a good idea to document what you own in order to prove ownership- especially for a theft claim. Use a Home Inventory spreadsheet to document what you own and you will also get an idea if you have enough personal property coverage to cover all of your belongings. Be aware that there are specific limits for certain items, like jewelry, and you might want to purchase additional coverage for specific items of high value that exceed those limits (also called ’scheduling an endorsement‘).

Loss of Use Coverage:In the event that your home is damaged in a covered claim and you and your family can not live in the home while it is being repaired/rebuilt, loss of use coverage provides financial protection for attaining other living accommodations in the meantime. Loss of Use reimburses you for hotel, restaurant and other living expenses you may incur as a result of your home being uninhabitable. This coverage typically carries a maximum payout of 20% of your dwelling coverage but you should check your policy for specific details.

Personal Liability Protection:Personal Liability coverage protects you against covered lawsuits that arise because you or a covered family member have caused bodily harm or damage to personal property owned by another person not covered under your policy. Most policies carry a minimum of $100,000 worth of personal liability coverage, however, many homeowners choose to purchase $200,000, $500,000 or $1 million in coverage or more. For example, homeowners who have a swimming pool on their property may carry higher personal liability limits as swimming pools pose a high risk for accidents and injuries.

Medical Payments:In order to prevent certain damage from becoming lawsuits, your insurance company also offers Medical Payments coverage which helps you pay medical expenses sustained by others on your property. Medical Payments Coverage (or MedPay) pays for doctor’s bills in various situations where a lawsuit does not exist for example:

• Your friend is bit by your dog and had to get stitches
• Your child’s friend fell off your swing set and sprained his ankle

MedPay will typically pay $1,000 for each injured person, however, higher limits can be purchased.

So, check your policy and if you feel you are not adeuqatly covered, contact an insurance agent for a quote and coverage assessment.