Homeowner's and Renter's Insurance
Homeowner's or renter's insurance protects your home and personal property against damage or loss, and insures you in case someone gets hurt while on your property. Homeowner's or renter's insurance may pay claims for:
- Damage to your home, garage and other outbuildings.
- Loss of furniture and other personal property due to damage or theft.
- Additional living expenses if you rent temporary quarters while your house is being repaired.
Homeowner's or renter's insurance may also:
- Include liability for bodily injury and property damage that you cause to others through negligence.
- Include liability for accidents happening in and around your home, as well as away from home, for which you are responsible.
- Pay for injuries occurring in and around your home to anyone other than you or your family.
- Provide limited coverage for money, gold, jewelry, and stamp and coin collections.
- Cover personal property in storage or away in dorm rooms.
Keep these tips in mind when shopping for homeowner's insurance:
- Insure your house, not the land under it. If you don't subtract the value of the land when deciding how much homeowner's insurance to buy, you will pay more than you should for your policy.
- Make certain you purchase enough coverage to replace what is insured. Replacement cost coverage gives you the money to rebuild your home and replace its contents. An actual cash value policy is cheaper but pays the difference between your property's worth at the time of loss minus depreciation for age and wear.
- Ask about any special coverage you might need. You may have to pay extra for computers, cameras, jewelry, art, antiques, musical instruments or stamp collections.
- Remember that flood and earthquake damage are not covered by a standard homeowner's policy. The cost of a separate earthquake policy will depend on the likelihood of earthquakes in your area. Homeowners who live in areas prone to flooding should take advantage of the National Flood Insurance Program: https://www.fema.gov/national-flood-insurance-program.
- If you are a renter, do not assume your landlord carries insurance on your personal belongings. Purchase a separate policy for renters.
Beware: When Coverages Collide
When a disaster strikes, your home may be damaged by several factors at the same time or one right after the other. You may think that your insurance policy will protect you, but that isn't always the case. Many home insurance policies include an anti-concurrent causation clause. These clauses give your insurer the right to reject your claim if your home is damaged by several factors, such as wind and rain. If these two or more factors together cause damage to your home, your insurer may deny your entire claim because it can't be determined which factor came first and actually caused the damage. You can face a serious shock if you thought your policy protected you from such disaster.
Before disaster strikes, read your home insurance policy closely for anti-concurrent causation clauses. Ask your agent if you may opt out of that clause or pay an increased premium to have full coverage.
U.S. General Services Administration (GSA). (2016, January). Insurance. In Consumer action handbook (pp. 31–32). Retrieved December 7, 2016, from https://www.usa.gov/