A homeowners’ policy usually covers:

> Your house and other buildings on your property
> Your personal property in your home or on your property
> Your personal liability
> Medical payments for others accidentally hurt on your property
> Additional living expenses if you must rent a place to live while your home is being repaired (due to a covered loss)

If your home is insured on a replacement cost basis, then claims are paid based on the cost to replace your loss, not its market value. The replacement cost is usually greater than the market value. If your policy is based on replacement cost, you must replace your property to be reimbursed; there are limits on the amount you can be reimbursed for your home.

A homeowners’ policy usually doesn’t cover:
> Flood
> Earthquake, landslide, or mudslide
> Sewer backup
> Identity theft

Your homeowners’ policy may not cover claims related to:
> Dog bites
> Swimming pools or trampolines
> Operating a business from your home

Be sure to ask your agent what your policy doesn’t cover (the exclusions). You may be able to buy a separate policy to cover some or all of the events your homeowner’s policy doesn’t cover. For example, you can buy flood insurance backed by the National Flood Insurance Program and often a separate policy to cover earthquake damage.

A homeowners’ policy usually limits coverage for these items:
> Mold
> Jewelry, guns, electronics, collectibles, and antiques
> The costs of meeting updated electrical, fire, plumbing, and building codes

You may be able to pay extra to add coverage to your policy.

Yes, most homeowners forms contain deductible provisions applicable to losses occurring under Section I (Section I losses include (a) dwelling, (b) appurtenant structure, (c) unscheduled personal property, and (d) additional living expenses). The type and amount of deductible varies by company. Deductible provisions do not apply to Section II losses (Section II losses include personal liability [bodily injury and property damage] and medical payments to others). Many companies now have an optional deductible applicable only to wind or hail losses. Most offer higher deductible options such as $1,000+ at a reduced premium.

Most homeowner policies provide coverage that does not apply to animals, birds, fish, automobiles and business property; for loss or damage caused by flood, surface water, water which backs up through sewers or drains, earth movement, nuclear damage, war, etc. Section II coverages (personal liability and medical payments) do not apply to the operation, ownership, use, etc., of any aircraft, automobile, recreational motor vehicle, water craft powered by more than 50 horsepower motor; bodily injury or physical damage caused by an intentional act of the insured. It must be noted that these are a mere sample of property and perils not covered. A complete review of your policy is the only way to determine what property is covered and what perils are insured against. Also, there are specific limits of coverage on property insured under the homeowner’s policy such as money, securities, water craft, theft of jewelry, silverware, and/or guns.

Generally, your own policy should cover the loss. Your insurance company may be able to recover the amount it pays you for the loss and your deductible from the homeowners insurance that your neighbor may have if the loss occurred as a result of your neighbor’s negligence.

Generally, your policy can be cancelled for these reasons:
> Non-payment of premium
> Material misrepresentation/Fraud
> Conviction of a crime arising out of acts increasing the hazard insured against. (For example, conviction for illegal storage of fireworks)
> Discovery of willful or reckless acts or omissions by the insured increasing the hazard insured against. (For example, not getting a gas leak fixed)
> Physical changes in the property insured which result in the property becoming uninsurable. (For example, should the home become vacant for more than 60 consecutive days, a greater exposure to vandalism and damage is assumed to exist)
> A determination by the Commissioner of Insurance that continuation of the policy would place the insurance company in violation of the law

The basic homeowner policy usually does not. However, this is a popular coverage for insurance companies to offer and you may be able to buy this coverage for a nominal additional premium. There is also the issue of where the power was lost. Some policies are limited to coverage for electricity lost in the home or where the electricity enters the home. Others will limit coverage to within so many yards from the home. Your agent should be able to tell you about the availability of coverage and how much it would cost.

Additional living expenses (ALE) coverage provides coverage if your home is destroyed by an insured disaster and you need to live elsewhere for a time.

The additional living expenses portion of your home or rental insurance policy pays for hotel bills, temporary rentals, restaurant meals and other expenses you incur while your house, rental home or apartment is being repaired or rebuilt. Essentially, it covers the expenses you would not have to incur if you had your usual roof over your head.

Most policies will reimburse you the full difference between your additional living expenses and your normal living expenses; however, there are generally limits as to the total amount the insurer will pay or time limits specifying how long you’re eligible for the ALE payments. Make sure you’re comfortable with the limits of the policy you choose.

Like homeowners insurance, renters insurance includes three key types of financial protection:

> Coverage for personal possessions
> Liability protection
> Additional living expenses (ALE)

The big difference is that renters insurance doesn’t cover the building or structure of the apartment—that’s the landlord’s responsibility.

Make sure you have enough insurance to replace all of your personal possessions in the event of a burglary, fire or other covered disaster. The easiest way to determine the value of all your personal possessions is to create a home inventory—a detailed list of all of your belongings along with their estimated value.

Actual cash value policies include a deduction for depreciation (that is, the idea that items lose value over time). Replacement cost coverage is pricier but can be well worth the extra expense if your belongings are damaged or destroyed (think about how much you’d get for your TV used versus how much it would actually cost to replace).

Renters insurance covers you against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm and certain types of water damage (such as from a burst pipe or when the tenant upstairs leaves the water running in the bathtub and floods your apartment).

Like standard homeowners policies, most renters’ insurance policies do not cover floods or earthquakes. Flood coverage is available from the National Flood Insurance Program and a few private insurers. You can get earthquake insurance as a separate policy or have it added as an endorsement to your renter’s policy, depending on where you live.

A deductible is an amount of money you are responsible for paying before your insurance coverage. For example, if you have a $500 deductible and a fire destroys $5000 worth of furniture, the first $500 is your responsibility and your insurance company will cover $4500.

Renter’s insurance deductibles are generally specified as a dollar amount, which can be found on the Declarations page of your policy. In general, the larger the deductible, the lower your insurance premium.

A floater is a separate policy that provides additional coverage for more costly valuables or items that may have specific limits if they are lost or stolen. If you have expensive jewelry, furs, collectibles, sports equipment or musical instruments, consider adding a floater to your policy to protect against their loss.