Homeowners insurance, often referred to as HOI, is a form of property insurance specifically for private dwellings. It is a combination of property and liability coverage. The property protection section is divided into four separate divisions:
This covers the house and everything attached to it. This includes pipes, electrical systems, fireplaces and even attached appliances if they are connected permanently to the house.
2. Other Structures
This covers all other structures on the land surrounding the home. This can include sidewalks, fences, patios, garages, storage sheds and basically anything in your yard.
3. Personal Property Coverage
This can include everything within your home, whether owned by you or a family member residing with you. The personal property coverage policy can be actual cash value or replacement cost. Actual cash value means the policy will pay what the item is estimated to be worth at the time, regardless of what it costs to get a new one. Replacement cost will pay the amount needed to replace the item, regardless of its actual cash value.
4. Loss of Use
Loss of Use pays for your living expenses should your new home become uninhabitable. For example, if you have severe wind damage, the policy will pay for a hotel and meals until your home is repaired and able to be lived in again.
Scheduling of Personal Items
The situation that most often is neglected on homeowner policies is the scheduling of personal items. The regular policy covers expensive personal items only up to a certain limit. If you own jewelry, art, furs, or any other valuable that exceed this single limit, it's smart to schedule the item on your homeowners policy.
To "schedule" the item is to specifically list it and its value so that the item can be covered. All homeowners insurance companies are different, but be prepared to pay about $25 per thousand per year for each scheduled item. For example, if you own a Rolex watch worth $10,000, it will cost $250 per year to insure it. Most companies demand an appraisal and photo of the item prior to scheduling it. If you don't schedule your valuables, your policy will just pay up to the total per item limit for any losses. This can be quite low; therefore it's wise to schedule all your valuables. As always, it's smarter to be safe than sorry!