Why do I need home and contents insurance?
Thanks to the current economic recession, home robberies are on the rise. If someone breaks into your home, you could lose some of your most valuable possessions.
If you have home and contents insurance your insurer will pay to replace those possessions. If you don’t have it, you’re out of luck.
What else does it cover?
In addition to covering your personal possessions such as furniture, clothing, electronics, jewelry, kitchen utensils, tools, sports equipment, etc., homeowners insurance pays to rebuild or repair your home after it’s been damaged.
It also provides liability coverage, so if someone hurts himself on your property your insurance will pay for any court-awarded damages, your legal fees, and any necessary medical costs.
And if you need to move out of your house while it’s being repaired or rebuilt, homeowners insurance pays for your hotel, motel, and restaurant bills, plus other additional living expenses.
What’s not covered?
Standard policies do not cover damages to buildings or personal possessions due to an earthquake, however most insurers will sell you earthquake coverage as an addition to your policy.
Damage by floods is not covered by standard policies, but FEMA flood insurance can be purchased through many insurers.
How much coverage should I get?
First, you need enough coverage to rebuild your home and any other structures on your property such as detached garages or greenhouses. To figure out the amount of coverage you need, ask a local builder or real estate agent what the building costs per square foot are in you area, and multiply that figure by your home’s square footage. Then get estimates for any other structures.
For personal possessions, you need enough coverage to replace the contents of your home. Take an inventory of everything you own, including each item’s value, and use the total value as the amount of contents coverage you need.