Insuring Your Biggest Asset

This blog is not intended to provide any legal, tax, or financial advice. It is a forum to discuss the daily issues of my practice.

Do you know the limits of your homeowners insurance policy? Many people I meet only have a cursory understanding of their policy. I think it has to do a lot with how people obtain their policy. Usually, a realtor or a mortgage broker will refer you to an insurance company a few days before your real estate closing and it is reflected as a prepay item on your settlement sheet. I also find that most people obtain just the basic coverage so they can keep their closing costs down.

So what does it mean to insure the biggest asset most people have (their home)? If you read your policy it will have your coverage listed on the Declarations Page. Normally, your homeowners insurance will provide coverage for both Property and Liability. Section I of most policies deal with property coverage which includes:

1) the “dwelling”that sits on your land;

2) personal property (subject to exclusions of course) owned or used by a resident, anywhere in the world, up to a certain amount of coverage (usually 50% of your coverage listed in section A of your policy);

3) additional living expenses incurred if your home becomes uninhabitabledue to damage by an “insured peril.”

4) Credit Cards (yes up to a certain limit -normally $500)

5) Collapse, BUT only as provided under the additional coverages

6) Breakage of glass or safety glazing material

7) Landlord’s furnishings (not the tenant’s) in rental property on the premises.

Section II of most homeowners policies deal with Liability. Most people think about liability when it comes to their car insurance but fail to pay attention to liability on their homeowners insurance. Coverage E on most policies will explain your personal liability coverage. The personal liability coverage provides both bodily injury and property damage coverage for “other-than-auto-related lossed (usually up to $100,000). “Other-than-auto-related losses” could cover many things, so if you ever sustain an”other-than-auto-related” loss you probably should take a look at your homeowners policy for possible coverage.

Coverage F explains how much Medical Payments are covered for injuries sustained by third parties.

If you want to know more about what the insurance you paid for on your house covers contact your insurance agent, your financial advisor, or your attorney.