1. Home Replacement Cost Coverage

Most insurance companies provide replacement cost coverage on the home up to the policy limit; sometimes an additional 25%. Some companies provide inflation guard endorsements, which increase the value of your home by a certain percentage each year. You should request “guaranteed replacement” coverage.

2. Personal Property Replacement Cost Coverage

Many policies provide “actual cash value” for your personal property. For example: Your sofa is burned beyond repair. You purchased the sofa 10 years ago for $950. The claim adjuster will estimate the life of the sofa at 20 years and pay you $475 (less your deductible) for your loss. A comparable sofa currently sells for $1250, this means it will cost you an additional $775 to replace the sofa. With replacement cost coverage on your personal property, you collect the entire amount of $1250 (less your deductible).

3. Personal Property ALL RISK Coverage

Many policies cover your personal property for specific perils only (fire, wind, explosion, aircraft, theft, etc.), and most people do not know this until they have a claim. The other option is commonly referred to as ALL RISK coverage. ALL RISK means you are covered for everything except those perils that are excluded (such as war, flood, nuclear, termites, etc). ALL RISK coverage is also referred to as “special coverage,” and is highly recommended.

4. Water Damage Coverage

If you have a finished basement or lower level in your home, you are susceptible to water damage from back up of sewers or drains, sump pump failure, or below ground water that seeps or leaks through your basement walls. Most policies do not cover this type of claim. If your basement is finished or you store personal property in your basement, you need to make sure you are covered for this type of loss.

5. Earthquake and Flood Coverage

Thinking, “it can’t happen here,” has cost many homeowners thousands of dollars and countless grief. Standard homeowner policies do not cover these perils. Some better policies have earthquake options. Flood insurance can only be purchased through the Federal Government. If your home is located near a river, creek, or drainage ditch, you should check out the possibility of this type of loss.

6. Building Code Coverage

This is very important for older homes or homes that may be in or near an area that has been re-zoned. For example, if your home was partially damaged from a fire, you may find that building laws will force you to tear down the undamaged part of the structure before rebuilding.However, this is not covered under most policies. If your home is in this situation, you need a policy that provides this important coverage.

7. Liability Coverage

The homeowners policy provides very broad liability coverage for your family. In addition to taking care of people injured on your property, this policy can protect you as a volunteer coach, a volunteer on a non-profit board, and in many other situations. Pets, pools, children, hobbies, recreational vehicles, etc. can increase your exposure to loss. We recommend a minimum limit of $500,000 since the additional cost is so small. In addition, you should consider a personal umbrella policy. For as little as $160 per year, you can add an additional $1 million dollars in liability coverage.

8. Home Business

A homeowner policy has no liability coverage for any type of business operated from the home. The only exceptions are incidental, such as children’s paper routes, your teenaged children babysitting outside your home, etc. If you have any money-making ventures operated from your home, you need to contact your insurance agent immediately.

Some homeowner policies can provide some limited business coverage for an extra premium. You may need to buy a small business owner’s policy. Do not assume you have any coverage under your homeowner’s policy unless you have it in writing from the insurance company.

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