A standard homeowners
policy protects against
fire, lightning, wind,
storms, hail,
explosions, riots,
aircraft wrecks, vehicle
crashes, smoke,
vandalism, theft,
breaking glass, falling
objects, weight of snow
or sleet, collapsing
buildings, freezing of
plumbing fixtures,
electrical damage and
water damage from
plumbing, heating or air
conditioning systems,
according to the
Insurance Information
Institute, a Washington,
D.C.-based nonprofit
group for the insurance
industry.
Such policies are
"all-risk" policies,
which cover everything
except earthquakes,
floods, war and nuclear
accidents.
A basic policy can be
expanded to include
additional coverage,
such as for floods and
earthquakes and even
workers' compensation
for servants or
contractors. Home-based
business-coverage, an
increasingly popular
rider, does not cover
liability associated
with the business.
Insurance experts
recommend that
homeowners obtain
insurance equal to the
full replacement value
of the home. On a
2,000-square-foot
home,for example, if the
replacement cost is $80
per square foot, the
house should be insured
for at least $160,000.
For personal items,
homeowners can increase
their coverage beyond
the depreciated value of
items such as
televisions or furniture
by purchasing a
"replacement-cost
endorsement" on personal
property.
Some experts
recommend an inflation
rider, which increases
coverage as the home
increases in value.
Q:
What is guaranteed
replacement cost
insurance?
A:
Guaranteed
replacement insurance is
a more comprehensive
policy. They tend to
cost more, but they
promise to cover the
complete costs -- less
deductible -- of
replacing a destroyed
house. With these sorts
of policies, limits on
the policies are not as
common, because complete
coverage is more
explicit.
