According to the Insurance Information Institute, A Washington, D.C.-based nonprofit group for the property-casualty insurance industry, a standard homeowners policy protects against fire, lightning, windstorms, 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. The institute's Sean Mooney says that the basic insurance policy in an "all-risk policy", which covers practically everything with the exception of earthquakes, floods, war and nuclear accidents.
This standard homeowners policy can be expanded to include additional coverage, such as for floods and earthquakes and even workers compensation for servants or contractors. There is a growing interest in home business-coverage, but Mooney warns that the basic homeowner policy doesnít cover liability associated with the business. Insurance experts recommend that homeowners obtain insurance equal to the full replacement value of the home. For example, on a 2,000-square-foot home, if the cost to replace the home is $80 per square foot, then 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. For example, if a 10-year old rug suffers water damage a homeowner can go out and get a new rug instead of only receiving the depreciated value of the old rug. Bob Vila in his book, quot;Guide to buying Your Dream Housequot;, Little, Brown amp; Co. Boston, Recommends that homeowners have and inflation rider to boost coverage as the home increases in value. Moreover, "it's up to you to see that your insurance coverage remains adequate," he writes.