Your homeowner's insurance policy is typically divided into two parts. One provides home insurance property protection and the other provides liability coverage. Each of these types of coverage may be further broken down as to what they cover. Many people, particularly if they own art, jewelry or technology may wish to carry additional endorsements or riders on their homeowner's insurance. Also, if you own a home business, you may be able to cover business liability via your homeowner's insurance.

Your mortgage lender has likely required that you provide proof of homeowner's insurance. What they require may well be different than the coverage you should actually have for adequate financial protection for your and your family. In many cases, your lender only requires that you carry coverage adequate to pay off the balance on your home loan. This amount may not provide you with the protection you need in case you have to call on your home owner's insurance after a fire, storm, or theft.

Your property protection covers your dwelling, including built in appliances, plumbing, wiring, and heating and air conditioning systems. A lower deductible may be helpful, and allow you to save; however, this will also increase your premiums. A thorough and well thought out homeowner's insurance policy should include coverage for your personal property and outbuildings as well. This may be based on cash value or replacement costs; replacement cost being the wiser choice. Consult with your insurance carrier with regards to whether any of your property requires additional endorsements or riders for adequate coverage. Loss of use coverage is less common, but will provide coverage for your expenses, including lodging, while repairs are being made if your house cannot be lived in for a time.

Your homeowner's coverage likely also offers you liability protection that is again subdivided into two parts. The first part provides financial coverage in case a lawsuit is filed against you with regards to injuries or accidents on your property. This coverage protects you and any family members in the home; however, it does not cover business liability. You may also have medical payment coverage, which will provide funds for medical expenses incurred in your home by individuals that do not live there regardless of fault.

How much homeowner's insurance do you need? In simple terms, you should aim for 100% replacement value of your home for dwelling coverage. Moreover, experts suggest approximately 50% of the home's value in personal property coverage for your possessions in the home. An inventory, complete with photos of valuable items, is a smart idea. Do be certain that you have replacement value coverage on possessions as well. Homeowner's policies are further clarified in terms of what sort of damage they cover and choosing the most inclusive options (typically an HO-3 policy) is a smart step in covering all your financial bases. While $100,00 to $300,000 in liability coverage is standard, if your assets exceed this amount you may wish to purchase an additional umbrella liability policy.

Making smart choices in your homeowner's insurance can provide you with critical protection in case of a fire, storm damage or theft. Choose smart, consult your insurance agent about your policy, and take the time to review your insurance needs regularly.