Three Components of a Homeowner’s Policy

It’s important to look at your basic policy components: structure, personal property, and liability to see if you have enough protection. Even if you don’t live on the San Andreas fault or collect antique firearms, you’ll probably need to get additional coverage for peace of mind.

Structure
Many common problems such as earthquakes, floods, failed sump pumps, and backed-up sewers aren’t covered in basic policies. To get this additional coverage, you’ll need to add endorsements or riders. The higher a certain risk is for your area, the more important it is to add this coverage. Coverage for sewer clogs is usually less than $50, but it’s a must, especially for older homes. A sewer backup is especially expensive because it takes special cleanup procedures caused by contamination. This is why Dale and Janelle had to call in a disaster cleanup company to handle their sewer backup mentioned earlier, and it added a couple of thousand dollars to their cleanup costs. I do hope someone send them a nice condolence letter.

Personal Property
All polices include coverage for the contents of your house, but often the amount isn’t enough. Basic plans commonly pay 50 to 70 percent of the policy amount. For example, a $175,000 policy would likely give you anywhere from $87,000 to $122,000 for the contents. This may sound like a lot, but when you go through your home and total up everything you’ve got, it’ll be a shock. The value adds up fast when you total furniture, electronics, wardrobes, power tools, a stamp collection, and so on.
If you have expensive items such as gun or art collections, antiques, jewelry, and computer equipment, you may want to consider extra coverage based on their actual value.

Liability
Most policies have a $100,000 minimum liability that protects you in case someone is injured on your property. Whether that’s enough depends on how much you have to lose if someone sues you. You can pay for more protection or add an umbrella policy that covers you for incidents away from home also.
For a home business or office with people coming to your home, your liability can skyrocket. Adding a $1 million umbrella policy for about $200 a year makes good sense.