by Ryan Law
I am in the process of having my auto insurance and homeowners insurance reviewed for potential savings, so these two policies have been on my mind recently. Two weeks ago I wrote about auto insurance (http://ofsmizzou.org/an-overview-of-auto-insurance/) and today I will discuss homeowners insurance in more detail.
The majority of homeowners insurance policies cover most perils (a peril is the thing that actually caused a loss – a hailstorm, a tornado, theft, etc.) except those specifically excluded. There are others that only cover the perils listed in the policy. Things that usually aren’t covered by any insurance includes routine maintenance, damage from flooding or landslides, damage from earthquakes, sewer backup and acts of terrorism.
Four specific things are covered by the property protection portion of your insurance:
Part A: Dwelling and attached structures
This covers damage to your home and any attached structures (an attached garage, for example). For example, if your roof is damaged in a hail storm and you need a new roof Part A would pay for a new roof. If your stove catches on fire and your kitchen is destroyed, Part A will pay to repair the damage.
Part B: Detached structures
This covers any structures that aren’t attached to your main home – a detached garage, a storage shed, etc. Coverage is usually 10% of Part A. If, for example, you have $200,000 worth of insurance on Part A you would have $20,000 worth of insurance on Part B.
Part C: Personal property
This includes all the property in your home – your TV, computer, clothing, etc. It is important that you have a record of what you have in your home so you could prove what you owned if it was stolen or destroyed.
Coverage is limited for collections, so you may need a rider if you have a collection (or expensive pieces of) jewelry, furs, stamps, firearms, antiques, tools, memorabilia or other similar items).
Part D: Living Expenses
If you couldn’t live in your home while repairs are being made or while it is rebuilt this portion will help pay for similar living expenses.
You will have a deductible for the property protection portions of your insurance – standard is $1,000, but if you have the cash you can raise your deductible which will lower your premium.
You want to look carefully to see if you have replacement cost or actual cash value. Replacement cost will pay for a replacement (i.e. if you have a 25-inch flatscreen TV that is stolen you will get a new 25-inch flatscreen TV). With actual cash value depreciation is taken into account. If your 25-inch flatscreeen is 5 years old and the insurance company figures that TVs last for 10 years you will only get about half the cost of a new TV.
The other part of insurance is liability coverage – which provides coverage for personal injuries or property damage that you or others living in your home are legally responsible for. This can be on or off your property. It does not cover intentional acts.
You will often see medical coverage as part of this as well that will help pay the doctor’s bills for people accidentally injured on your property.
 Flood Insurance is provided by the federal government – you can access that at www.floodsmart.gov