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Understanding Homeowner's Insurance

By Tabitha Naylor

Living in Southern California means great weather, gorgeous landscapes, and access to amazing cultural opportunities, but it also means you have to pay special attention to your homeowner's insurance options. If you are planning to buy a property, there are some things you should know about in advance that include financing options, insurance, and legal matters. Homeowners insurance is an important risk management tool in the event of fire, water damage, or a catastrophic event that severely damages or destroys your property.

Many firms offer homeowners insurance policies but it is essential to learn the details of an insurance policy. Policies vary greatly from one company to another, as do the options available from a single insurance company. Doing your due diligence will help you make an informed decision that best meets your individual needs. As a homeowner in Southern California you have some unique hazards that the rest of the country never has to deal with, like wildfires, mudslides, and earthquakes. Under Southern California law, each insurance company calculates its own rates, subject to California Department of Insurance (CDI) approval. Since each company's loss experience differs, the rates will differ as well. Here are the major types of coverage contained in any standard homeowners' insurance policy.

Coverage for the Structure of your Home and Other Structures

This policy is offered by many insurance firms and takes care of repair and renovation that may be required after a home suffers damage. The kinds of damages usually covered under this include lightning, fire, hailstorms, and strong winds. Most firms recommend that insurance for catastrophes such as flood, earthquake be purchased separately. Standard policies always include structures adjacent to the homes such as a garage, tool shed, or porch. These structures generally take up 10 to 20 percent of the total home insurance coverage.

Coverage for your Personal Possessions

Most insurance companies provide 50 to 70 percent of the amount your home is insured for. That means that if your home is insured for $200,000 then your personal possessions damaged or destroyed would be covered up to $140,000. This amount covers theft or damage to clothing, furniture and other household possessions. To determine the value of your home's possessions, conduct a home inventory. If the amount of your inventoried possessions is greater than your standard coverage consider purchasing an additional rider or floater policy to increase the amount of coverage. Floater policies are recommended for valuable items like art and jewelry. Some homeowner policies contain sub limits for possessions like silverware, guns and furs. They also limit coverage for property that is kept in other buildings apart from the insured residence. The only way to ensure full peace of mind is to purchase full coverage for all your personal possessions.

Coverage for Additional Living Expenses

Southern California is prone to wild fires that can easily gut valuable real estate property forcing you to vacate your property until repairs can be made or the home rebuilt. This type of coverage is rarely needed but if you find yourself in the position of needing it, it can be a life-saver. This type of coverage pays for you to rent another home or live in a hotel while your home is being rebuilt or repaired. It also covers items like restaurant meals and incidentals such as laundry costs etc. you may incur while displaced from your home. You should be aware however, that these policies have strict daily limits as well as total cost limits. If you do not want to incur unwanted expenses you should check your policy carefully to understand how much you will be reimbursed.

Liability Protection

This insurance policy protects the homeowner against claims, or lawsuits from people injured by family members, including pets, on your property, or on others' property. It may also pay for injuries sustained to pets during catastrophic events such as earthquakes and fires that often occur in picturesque Southern California. This kind of policy also provides for medical and wage loss coverage for people injured on your premises as well as court costs up to the limit of the policy.

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