When reviewing your homeowners insurance policy, there are several key aspects to check to ensure you’re adequately covered:
1. Coverage Amounts
- Dwelling Coverage: Ensure the amount is sufficient to rebuild your home in case of total loss, considering current construction costs.
- Personal Property Coverage: Check if your belongings are adequately covered. Some policies may offer only partial coverage for high-value items like jewelry or electronics.
2. Deductible
- Confirm the deductible amount, which is what you’ll pay out of pocket before insurance kicks in. Make sure it’s affordable.
3. Liability Coverage
- This protects you if someone is injured on your property. Ensure that the liability limits are high enough to protect your assets from lawsuits.
4. Exclusions and Limits
- Check what events (perils) are not covered, such as floods or earthquakes, and what limits exist for certain types of claims, like mold or water damage.
5. Additional Living Expenses (ALE)
- Make sure your policy covers the cost of temporary housing if you are displaced from your home due to a covered event.
6. Endorsements or Riders
- Review any additional coverages you may need for specific risks, such as a home business, luxury items, or natural disasters not covered by standard policies.
7. Water Damage/Flood Coverage
- Standard policies often exclude flood damage. Consider a separate flood insurance policy if you’re in a flood-prone area.
8. Earthquake Coverage
- Earthquakes are not typically covered by standard policies. If you live in a quake-prone area, consider purchasing a separate policy or rider.
9. Replacement Cost vs. Actual Cash Value
- Understand whether your policy pays for the replacement cost of damaged items or only the actual cash value, which factors in depreciation.
10. Mold and Termite Coverage
- Check if there are exclusions or limits on coverage for mold, termites, or other gradual damage.
Reviewing these aspects can help ensure you’re adequately protected against potential losses and understand your financial responsibilities.
