Sunday, September 30, 2007

Homeowners insurance coverage

Insurance coverage of Homeowners 3 or "HO-3" policy, the most common type in the U.S.

- Water seepage is excluded under standard homeowners insurance coverage. And if the water seepage is not due to a flood you will not be covered under a flood policy. Problems like seepage are viewed as maintenance issues and are not covered by insurance.

- Liability: The standard amount is $100,000. If you feel you need more, consider purchasing higher limits.

- The standard homeowners policy provides broad coverage for a large number of perils, including all those listed above: fire, lightning, tornadoes, wind storms, hail, explosions, smoke, vandalism and theft. There are some limits, however, on the amount of insurance provided.

Carefully check the dollar limits of insurance in your policy. Make sure you are comfortable with the amount of insurance provided for specific perils. For example, the standard policy provides only $1000 for theft of jewelry. If your jewelry is worth significantly more, you should purchase extra coverage with higher limits. You may wish to add a floater to your policy to cover specific valuable possessions, such as expensive paintings or silverware. This floater will provide both higher limits and protect you from additional risks not covered by your homeowners policy.

- Your homeowners policy covers your personal property no matter where it is on your property, including in your car. Note it doesn't cover replacement cost, only current value.

- While not specifically included, earthquake coverage is sold as additional coverage to a standard homeowners policy. In some areas, this additional coverage is mandatory.