Finding the right insurance for your particular situation is crucial if you want to be sure you are going to be properly covered. The worst time to find out you're not covered is when you have a claim the adjuster won't pay.
Life is full of risks. You can lose your home in a fire, your car in an accident or all your assets in a lawsuit. The risk can be greater than people realize. The last time we had someone lose their home in a fire, our insurance company paid out over $900,000 to help rebuild their home and replace their lost belongings. That's a bigger risk than most of us can afford to take.
Even if you want to take a big risk, a lender will require you insure the car, home or other collateral that secures your loan. And the law may require you to have certain kinds of insurance, like liability insurance for causing injury to others with your car.
When you are shopping for auto insurance, the agent will often ask did you want "full coverage" or "just liability". Car insurance is actually a lot more complicated than that. Here's a guide to some of the most common coverage options:
There are two types policies you can use to insure a house you own. Homeowners policies are for insuring a house that you own and live in, your home. Dwelling policies (also known as landlord policies) are the policy used to insure a house you own that's rented out to others. Using the right type of policy is critically important. For example, if you insure a rental house with a Homeowners policy, the insurance company can deny a claim for damage to the house or injury to the tenants.
Our home is our most valuable asset. And our home is full of our personal belongings, either of which can take hundreds of thousands of dollars to rebuild, repair or replace. Most of us know someone who has lost their home and everything in it due to fire or other natural disaster.
Dwelling Coverage - Most policies pay to replace your home with a new home, up to the limit of coverage on it. Many will even pay an additional 25% or 50% of that amount if it costs more to rebuild than you expected. It always takes more to rebuild than you think it will. Two out of three homes in the U.S. are underinsured, on average homes are insured for only 78% of the amount needed to rebuild them.
Other Structures Coverage - Provides coverage for loss to other things built on your property, like fences, detached garages, patios and pools. Automatically provided in most policies in an amount that's 10% of what the house is insured for. People with detached garages or other outbuildings generally need more and increased coverage is very affordable.
Personal Property Coverage - Homeowners policies include coverage for your personal belongings, generally in an amount based on 70% of the amount the home is insured for. Your property is covered at home and elsewhere, like on vacation. Property normally kept somewhere else may not be covered as well, though. Some things only get limited protection, though additional coverage is generally available if you know to ask for it.
Loss Of Use Coverage - If you can't live in your home due to covered damage to it, this coverage will pay the costs to stay elsewhere. It also pays other costs of living that are higher due to having to live elsewhere.
Personal Liability Coverage - This pays for accidentally harming others or damaging their property. The most common claim in recent years is for dog bites. The average paid out for a dog bite claim in 2017 was $37,051. Liability can also cover guests getting hurt at your home. Some common sources of injury claims that often aren't covered are:
Types Of Loss That Are Covered - Policies will vary dramatically in what types of loss and damage they will cover. Better home policies insure the home against most types of damage, not including things like earthquake, flooding or maintenance items. Flood insurance is a separate policy that will be required by your mortgage company if you live in a high risk flood zone. Personal property often isn't covered against as many things as your home is. If you have some valuable things, there are several ways they can be better protected.