According to ThisOldHouse.com, if you live in a flood-prone area of the U.S., you are 26 times more likely to suffer a flood loss than a fire. And, the standard comprehensive homeowner's policy doesn't cover floods; like earthquakes, they require separate insurance or a policy rider. Today, most homeowners insurance is "comprehensive," covering property, belongings, liability and living expenses in one policy. Savvy insurance buyers need to make sure they have the right coverage in each category.
History
Comprehensive homeowners insurance started in the 1950s, when the insurance industry decided it needed a comprehensive policy to cover a home, personal belongings and liability. Full comprehensive insurance provides coverage for all risks, except for those specifically excluded -- typically floods and earthquakes. A more basic form of comprehensive insurance covers only risks specifically included.
Guaranteed-Replacement Policy
A guaranteed-replacement policy replaces your home, even if the costs to do so exceed the maximum amount on your policy. This insurance pays for replacement using the same or similar materials, so some older homes may not qualify. A guaranteed-replacement policy ranks as the most expensive homeowner's insurance.
Straight Replacement Cost Coverage
Limited to the policy amount, straight replacement cost coverage usually costs less than half of guaranteed-replacement policies. For example, if your home burns down, the insurer will pay to replace it, up to the maximum amount on the policy. If replacement costs exceed that amount, the homeowner's responsible for the difference.
Comprehensive Personal Liability Insurance
Comprehensive personal liability insurance protects you from people bringing claims against you as a result of accidents on your property, such as a dog bite, slip and fall accidents, and injuries on tennis courts or in swimming pools. It pays medical bills for the injured person, his lost wages, rehabilitative services and a settlement payment in the event of a lawsuit brought against you by the injured person.
Living Expenses
A comprehensive policy will also include coverage for living expenses for you and your family if damage or loss forces you from your home. You may have to live in a motel or a rental unit until your home is repaired or rebuilt. However, limits exist for this coverage -- don't expect to live in the most expensive hotel, should tragedy strike.
