Your Homeowner's Insurance Policy - Dissected: Part 4 of 5

If your homeowner’s insurance policy has been stuck in a drawer, cabinet or just tucked mindlessly away somewhere, it is probably about time to pull it out, shake off the dust and make sure it’s still up-to-date. This article is the fourth in a series of five articles that will help you decipher your homeowner’s insurance policy.

The rooster is crowing (or the cars are honking, depending on where you live), the coffee pot isn’t working and the kids need to be shuttled off to school. You barely have time to run a brush through your hair, much less worry about your homeowner’s insurance.

While keeping your homeowner’s insurance updated is a dismal task, it is of utmost importance. As discussed in a previous article, not only is it important to purchase homeowner’s insurance, it is just as important to know what that policy covers.

Homeowner’s insurance policies contain several different coverage areas.

The topic of the previous article, Part 3 of this series, discussed insuring your personal items and belongings. This article will explain how to cover additional living expenses incurred in a disaster.

COVERAGE FOR ADDITIONAL LIVING EXPENSES

In addition to covering your personal belongings, your homeowner’s insurance also includes compensation for additional living expenses.

Let’s say, for example, your house is burned down by an electrical fire. You shouldn’t be faced with utility bills, but other costs will assuredly skyrocket.

You won’t have to worry with the water bill or that blasted electricity, but you unfortunately won’t be sleeping in the comforts of your fluffy bed or enjoying fresh fare from your kitchen, either.

This is where additional living expense coverage kicks in. You will need lodging, clothing, food and other items until your home is rebuilt so you will probably have to rely on a few nights’ stays in your local motel and enjoy restaurant food for awhile, in addition to other expenses.

Because every single homeowner’s policy is unique, you need to know what your policy’s coverage limit is. This amount will vary from insurer to insurer.  Some insurance companies will allow unlimited cash flow in this area of coverage, while others will offer provide coverage for a percentage of your total homeowner’s insurance coverage. This is a very important detail, so be sure to check your policy!

In the end, it is essential to know what you’re covered for because each homeowner’s insurance policy is different. You need to know what yours limits or excludes.

Is your homeowner’s insurance policy up-to-date? (Some policies automatically update your home’s current value. Does yours?) While it is easy to let that dust settle over your policy from year to year, keep in mind that putting it aside could cost you much more in the end. Your homeowner’s insurance policy may make heavy reading, but it will be even more burdensome should you not know what is covered in it.

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*Please note that this article is not a professional consultation. This article is for general information only. Always seek specific information from a licensed insurance professional.*