All policies will include both property insurance with a deductible and personal liability insurance with no deductible. Let's look at some other issues:
- Other structures. Your garage, tool shed, etc. should be covered up to 10% of the insured value of the home itself. Be careful here: If you have an office or side business in a separate structure, it will not be covered by your homeowner's insurance.
- Contents insurance. These items are usually covered up to half the insured value of the home. A $100,000 policy, for example, typically provides $50,000 in contents coverage. You can increase this to 70%. Some types of personal property, such as motorcycles, may be excluded entirely, while others, such as silverware and similar valuables, can be purchased by getting a floater.
- Living costs. These are incurred if you live elsewhere, in a motel or hotel, for instance, while repairs are being made due to damage caused by an insured risk.
- Personal loss. This includes possessions of children who are away at school or property you are carrying while you are on vacation or a business trip. Usually coverage is for up to 10% of the insured value of the home.
IMPORTANT NOTE: If you're single, and buying as live-togethers, be very careful about your insurance. Some companies will cover all owners on one policy, others will not. If you suffer a theft, and the policy doesn't have your name on it, you won't be covered if it was your property that was stolen.
- Umbrella policies. If someone slips and falls on your walk, your personal liability coverage will foot the bill, usually up to a maximum of $500,000 per occurrence for damages plus $5,000 in medical payments. Since damage awards are so high today, consider increasing this limit. It is wise to have an umbrella policy. This type of policy is available in addition to a basic policy. It is typically for $1 million or more. The premium for such coverage is modest, usually under $200 annually. Umbrella liability coverage does require underwriting and may not be available in certain situations.
IMPORTANT NOTE: Many states require the purchase of worker's compensation insurance for your domestic household workers as part of your homeowner's policy. The rules in each state vary widely, so check with your insurance broker or state employment office to see how this affects you.
- Medical Payments. This coverage is for injuries that occur on your property, up to a maximum of typically $1,000 per occurrence to you or others.
- Other Damage. This pertains regardless of fault, with coverage typically up to $500. You'll use this if your child hits a baseball into your neighbor's living room window.