Homeowners Insurance - Minnesota
A standard homeowners insurance policy (HO3) includes four essential types of coverage.
1. THE STRUCTURE OF YOUR HOUSE - This part of your policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hail, lightning or other disaster listed in your policy. It will not pay for damage caused by a flood, earthquake or routine wear and tear. When purchasing coverage for the structure of your home, it is important to buy enough to rebuild your home called replacement cost coverage.
Most standard policies also cover structures that are detached from your home such as a garage, tool shed or gazebo. Generally, these structures are covered for about 10% of the amount of insurance you have on the structure of your home. If you need more coverage, call us about purchasing more insurance.
2. YOUR PERSONAL BELONGINGS - Your furniture, clothes, sports equipment and other personal items are covered if they are stolen or destroyed by fire or other insured disasters called perils. Most companies provide coverage for 50% to 70% of the amount of insurance you have on the structure of your home and there are companies that offer 100% contents coverage. So if you have $100,000 worth of insurance on the building of your home, you would have between $50,000 to $70,000 worth of coverage for your belongings. The best way to know if there coverage is enough is to inventory your home.
This part of your insurance policy includes when you take things with you away from your house. This means that your things are covered anywhere in the world, unless you have decided against purchasing the coverage. Some companies limit the amount to 10% of the amount of insurance you have for your possessions. There are also other options to cover ID theft with your homeowners insurance.
Expensive items like jewelry, furs and silverware are covered, but there are usually dollar limits if they are stolen. Generally, there are limits associated with all of your jewelry and furs. To insure these items to their full value, purchase a special personal property endorsement/rider or floater and insure the item for it's appraised value. Coverage includes “accidental disappearance,” meaning coverage if you simply lose that item. And there is an option of no deductible.
Trees, plants and shrubs are also covered under standard homeowners insurance. Generally you are covered for 5% of the insurance on the house—up to about $500 per item. Perils(causes of loss) covered are theft, fire, lightning, explosion, vandalism, riot and even falling aircraft. They are not covered for damage by wind or disease.
3. LIABILITY PROTECTION - Liability covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by your pets. So, if your son, daughter or dog accidentally ruins your neighbor’s expensive rug, you are covered.
The liability portion of your policy pays for both the cost of defending you in court and any court awards—up to the limit of your policy. Your liability policy follows you anywhere in the world.
Liability limits generally start at about $100,000. Recomendations are that you purchase at least $500,000 worth of protection. You can purchase an umbrella or excess liability policy which provides more coverage, including claims against you for libel and slander (for people who can not control their opinions), as well as higher liability limits. Generally, umbrella policies cost between $140 to $350 for $1 million of additional liability protection.
Your policy also provides no-fault medical coverage. In the event a friend or neighbor is injured in your home, he or she can simply submit medical bills to your insurance company. This way, expenses are paid without a liability claim being filed against you. You can generally get $1,000 to $5,000 worth of this coverage. It does not, however, pay the medical bills for your family or your pet.
4. ADDITIONAL LIVING EXPENSES/Loss of Use - This pays the additional expenses of living away from home if you cannot live there due to damage from a fire, storm or other insured disaster. It covers hotel bills, restaurant meals and other expenses, over and above your customary living expenses, incurred while your home is being rebuilt. Your mortgage, if you have one, is still your responsibility.
Keep in mind that the ALE coverage in your homeowners policy has limits, usually a percentage of the amount of coverage you have on your home, and some policies include a time limitation. But the amount of ALE coverage is separate from the amount available to rebuild or repair your home. For example, suppose you have a policy that provides up to $150,000 in rebuilding costs and up to $15,000 (10 percent) for ALE and you use up the entire $15,000, your insurance company will still pay what it costs to rebuild your home up to the policy limit of $150,000.
Many policies have coverags for ALE that are unlimited to a time period... verify what yours is on your policy.
If you rent out part of your house, ALE coverage also reimburses you for the rent that you would have collected from your tenant if your home had not been destroyed.
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