If you are a proud homeowner on Long Island, chances are that you have a home insurance policy. But having such a policy and knowing exactly what it provides cover against are two completely different things. Most of us hate to read long, technical documents, which means we might be paying for something we don’t really know much about. Luckily, after reading the following easy summary, you will know nearly everything you have to know about the undeniable benefits of home insurance.
This part of the policy covers the home itself, i.e. the walls, ceiling, floors, etc. What is important here is to understand whether you are covered for the actual cash value of the property, or the replacement cost.
Particularly if you have an older home, the cash value might be well below the replacement cost, which means that should disaster strike, the insurance payout might not cover the cost of rebuilding your home. That is why most of the time it’s a good idea to ensure that you are covered for the replacement cost.
This section of your home insurance policy provides cover for those structures that are not part of the main property, for example, the garage, a storage shed, a fence, or even the mailbox. Sometimes insurance firms also provide cover for the swimming pool under this section.
As a rule of thumb, the total amount covered by this part of the policy should be around 10% of the dwelling coverage - but it could be less (or more). If you have a barn and a double garage, you will e.g. need more cover than if you only have a single garage and a fence.
Insurers typically allow an amount between 2 percent and 70 percent of the main dwelling for this part of the policy.
This section of the home insurance policy can be particularly tricky. What is important to know here is that the majority of home insurers place limits on how much they pay out for valuable items such as fur coats, works of art, or jewelry. If you, therefore, own a Picasso painting worth $10 million, don’t assume the standard policy will cover it. You are going to need an ‘endorsement’ for that, and pay an additional amount.
Most people opt for between 50 and 70 percent of the value of the main dwelling for this part of the policy but once again it depends on your individual situation. If you don’t own a lot of valuable items, this is the section where you can save money by reducing the insured amount.
Loss of use
If you live in an area that is prone to disasters, this type of coverage can be crucial. It makes provision for the costs that you might have to incur if you are ever denied the use of your home by such an event. These costs could, for example, include staying in a hotel, and eating at your favorite restaurant if your home (including the kitchen) becomes unusable for some time.
Personal liability cover
This part of your home insurance policy provides protection if your dog should, for example, bite your boss or your mother-in-law when they come visiting. It will also cover damage incurred to their property while on the premises and their medical bills if they get hurt in the process.
The last section of a typical home insurance policy specifically covers medical expenses that arise because of an unintended injury to others while they are on your property. This usually refers to the cost of emergency medical care, without taking into account whose fault it was. An example could include the postman slipping on your wet garden path on his way to the front door and breaking his arm. If he subsequently decides to sue you, that will be covered by the personal liability cover of the policy.
Deductibles and coverage limits
Readers should also take into account that all these coverages are usually subject to a limit, i.e. a maximum amount the insurance firm is prepared to pay out per claim. The policy owner has to pay the rest. You might, however, be able to negotiate with the insurer about these limits before signing up for a policy. Also, don't forget that on Long Island we have to contend with a hurricane deductibles. Most of the national insurance companies will require that you have a large hurricane deductible...typically 5% of the dwelling amount. However, there are also options from many regional companies that write homeowners insurance on Long Island that may eliminate a special hurricane decutible.