BOSTON (CBS) – The single largest hard asset most of us will ever own is our home and it is critical to protect it with insurance.

You cannot get a mortgage today without proof of homeowner’s insurance. If something should happen to your home, the mortgage holder wants to be paid.

When you purchase homeowner’s insurance you usually get coverage for lots more than the structure of the house. Most of us own an HO3 policy and it covers you against fire, lighting, wind, hail, explosions, riots, aircraft wrecks, vehicle wrecks, 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 and air conditioning systems to the basic structure of the home, out buildings such as a detached garage or shed and the contents of the home usually up to an amount equal to 50% of the value of the home.

A standard homeowners insurance does not cover terrorism, acts of war, nuclear accidents, earthquakes, floods or extensive mold damage.

Your policy will also cover your personal items even if something happens to them when you have removed them from the home, such as having your luggage and golf clubs stolen from your car while on vacation. It also covers personal items that may go off to college with your kid. Now most of us have a deductible of anywhere from $250 to $5,000. If the items stolen fall within the deductible amount the insurance company will not reimburse you for the loss.

Your policy will also provide some limited liability insurance. If someone is injured on your property or harmed by something you own like a dog or your snow mobile you can be held liable for such injuries. This coverage will provide some relief and also will cover the medical expense of the injured party usually only up to $1,000. This is the minimum amount required and you may want to increase this coverage.

Also covered are living expenses if you should need to seek shelter elsewhere after a loss to your home. These expenses are usually limited to 20% of the replacement costs of your home.

Collectibles such as antiques, oriental rugs, coins and stamps are not normally covered. There is often an internal limit to how much an insurance company will pay for such things as jewelry and furs so you will need to purchase extra insurance in the form of a rider to your policy for anything of value not covered.

If you work at home, as so many of us do these days, you want to be sure you have coverage for your equipment and any liabilities that might arise due to your home office. This usually requires purchasing additional coverage in the form of an endorsement. By not letting the insurance company know you are working at home you are risking much more than the extra premium. They can refuse to pay a claim.

One more thing:  You need to be covered for at least 80% of the value of your home. If you fall below that number the insurance company can refuse to reimburse you in full for a total loss. Be sure the contents are covered for replacement costs as well.


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