Limitations in Property Policy Coverage

Your standard property policy will have limitations in theft coverage for jewelry and furs, silverware, business property, bicycles, money, and boats and motors. If you own any of these special items, it's a good idea to consider adding additional coverage to your policy.

Paying a Property Insurance Deductible

When you make a claim, a small portion of the claim is always paid by you first, then your insurance company pays the rest. The portion you pay is called your deductible. The amount of your deductible affects the price of your insurance policy. The higher your deductible, the less the cost of your insurance premium.

Building Coverage

All-Risk Building coverage insures your building for the most common types of losses. When you have All-Risk Building coverage, your building is insured for everything—unless it's specifically excluded from your policy (e.g., intentional damage to your own property would not be covered).

Named-Perils Building coverage includes a list of the most common types of things covered under your insurance. Named-Perils Building coverage includes fire, theft, and water damage. Everything is listed very clearly in your policy booklet, so you have a complete and thorough understanding of what your insurance policy covers. Named-Perils Building coverage is very rare. After all, your home is probably the largest investment you will ever make. Why would you not want it fully protected?

Contents Coverage

All-Risk Contents coverage insures the belongings inside your home for the most common types of losses. When you have All-Risk Contents coverage, your contents are insured for everything, unless it's specifically excluded from your policy.

Named-Perils Contents coverage includes a list of the most common types of things covered under your insurance. Named-Perils Contents coverage includes fire, theft, and water damage. Everything is listed very clearly in your policy booklet so you have a complete and thorough understanding of what your insurance policy covers.

A standard home policy provides for the Actual Cash Value (ACV) replacement of your belongings. This means you receive only the value of the item, less depreciation. For example, if you purchased a television five years ago for $500, you might only get $100 for it if it were destroyed in a fire today—even though it may cost you $600 to replace that same television.

Many people choose to add the Replacement Value option to their Contents coverage. Replacement Value coverage means that the contents of your home are insured for the amount it would cost to replace them. When you replace the items with a similar kind and quality, within a specified time, the insurer will pay you what it cost you to replace the items, not what they were actually worth in their used state. This means if your five-year-old television was lost in a fire, you would get the full amount to replace it today--even if that is more than you paid for it originally.

Detached Private Structure

This type of coverage applies to structures that exist on your property, but that are not connected to your primary residence. For instance, a detached garage could be included under this coverage. There is usually a certain limit assigned to this kind of coverage, but you can always increase that limit by purchasing additional coverage options.

Additional Living Expenses

If you are forced to leave your home because of a loss, this coverage pays for your reasonable and necessary expenses to temporarily live away from home. Hotel and food costs are the type of expenses that would be covered under such circumstances. There is usually a limit on this kind of coverage.

Personal Liability

Liability is a legal responsibility. Liability insurance protects you from having to pay damages to people if you've been found responsible for unintentionally injuring them or damaging their property. Here are some examples:

• If someone injures himself/herself on the property you occupy, you may be responsible for damages. For example, if someone slips on your front steps, breaks his/her leg, and can't go to work, you could be held responsible for the person's lost wages.
  
  
• If you or a member of your family damages another person's property, you may be held liable. So if your son accidentally throws a baseball through the neighbor’s window and breaks an expensive antique, you may have to pay.

The beauty of liability insurance is that it protects you anywhere in the world. Say, for example, your golf club accidentally flies out of your grip on a Florida golf course and strikes and injures another player. Liability insurance would cover this accident.