A standard home insurance policy only covers your home for the perils named in the policy, and often falls short of providing you with all of the coverage your home needs. To make up the difference, you will need to add some additional coverage, called riders, that expand the policy beyond the dangers listed in the standard policy.
Natural disasters such as earthquakes or floods are not part of the standard policy. Even though fire is a named peril, if the fire is the result of movements in the earth’s crust, your coverage will not pay to repair or replace your home. The same is true of flooding when it is caused by a hurricane. Your home is protected against water damage, but flooding is usually defined as water that rises above its banks, such as a failed levy or river that overflows the local bulkheads.
Limited Personal Property Protection
A home insurance policy is limited when it comes to your personal property. Most policies won’t pay more than a few thousand dollars for all personal property, regardless of the actual value of said property. If everything you own is lost in a disaster, a standard home insurance policy will only pay for a portion of those losses, usually no more than 10% of the value of the home. A personal property rider can increase the covered value of your personal property.
Cash Value vs. Replacement Value
There is a huge difference between cash value or replacement value coverage. Over time, the value of your property depreciates while the cost of replacing it increases. Make sure that your policy will fully replace or repair damages, not just pay you the depreciated amount.
Other Unexpected Perils
Not all perils are included in a standard home insurance policy. To remedy this, add a rider that includes all perils. You will have to pay a little more for the extra coverage, but your home and property will be much better covered. Perils that are not usually covered include floods, damage caused by vehicles, vandalism, riots, and several others. By switching from a standard home insurance policy to more complete coverage plan, your insurance will take on the added burden of protecting your home against everything that is not specifically excluded in the wording of the policy.