There are a few basics to homeowners insurance, but there are some common misconceptions about what is actually covered. Here are some of the basic policies and what they cover.
Structure of Your Home
Policy pays for damage to rebuild your home and other structures such as your garage if it is destroyed. Damage from: fire, hurricane, hail, lightning, and anything else listed in your policy is covered. Damage from: flood, earthquake, routine wear is not covered. However, if you do live in an area where flooding and/or earthquakes are common you can add additional coverage to your policy in most cases. Most important thing to note is to make sure you purchase enough coverage to rebuild your home.
Many of your personal belongings are covered in the case of a fire, hurricane, and other disasters included in your policy. In order to feel you have the correct amount of coverage, you should conduct a home inventory. Personal belongings not store in your home can also be covered depending on your policy.
Some of your belongings may have dollar limits. For example, unauthorized credit card usage usually has a limit around $500. There are also limits for things such as jewelry unless you add a personal property endorsement to your coverage at an additional cost.
Something that may also be added are plants, usually for $500 each and excludes damage due to disease or neglect.
Liability covers injury to guests you may have in your home at any given time. The amount of liability coverage is at your discretion, but there are certain factors that may cause the suggestion of higher liability coverage.
Liability coverage can cover medical expenses or defense in court if you are sued for the injuries. You may want/have to increase your coverage if you own a large dog, own a trampoline, or own a swimming pool, all of which increase the likelihood of injury.
Additional Living Expenses
Additional living expenses are usually an hotel bills, restaurant bills, incurred when displaced from your home due to destruction and the need to rebuild. However, there is a time limit for these costs.