Homeowners insurance provides plenty of protection for your residence. If a fire destroys your home, your insurance will help you rebuild. If a thief breaks in and steals your electronics, your policy will help you replace the stolen items.
But a standard homeowners insurance policy doesn’t cover everything that could go wrong with your home. That’s why you should investigate supplemental insurance policies that cover everything from earthquake damage and flooding to sewer line failures.
Here are some additional insurance coverages you should consider to provide the most financial protection for your home.
1. Sewer and water line protection
The water coming out of your kitchen faucet comes from somewhere — a water line traveling under the ground to your home, to be exact. And when you flush your toilet? That wastewater leaves your home through an underground sewer line.
If these lines get clogged, damaged, or break, you’re responsible for paying for the repairs. That can be expensive, as contractors will have to dig through the ground to get at the damaged or broken pipes. Not only will you have to pay for this work, you’ll probably need to hire landscapers to fix the mess left behind in your front yard from all the digging.
You can protect yourself by purchasing a water and sewer line protection plan from your utility company, or from a private insurer if your utility company outsources this job. These plans are usually affordable — about $5 or so a month added to your utility bill — and will often cover $5,000 for the repair work to sewer and water lines and $5,000 for the street repairs necessary to fix this problem.
2. Sewage backup
It’s an unpleasant surprise: Sewage has risen through your basement’s floor drains and is now covering its floors. It’s not only a mess, it’s unhealthy, too.
And here’s another surprise: Most homeowners insurance policies don’t automatically cover sewage backups. If you want this covered, you’ll have to pay for a rider — additional coverage — that specifically covers damage and cleanup costs relating to sewage backups. You can usually purchase this additional coverage for about $50 a year.
3. Flood insurance
You might think that your insurance policy will automatically cover the damages caused when heavy rains send water flooding into your basement. But this isn’t the case. Standard policies don’t provide coverage for flooding.
If you want this coverage, you’ll need to purchase flood insurance.
The Insurance Information Institute says that homeowners can buy flood insurance from the National Flood Insurance Program, which is run by the Federal Emergency Management Agency, better known as FEMA. The Insurance Information Institute says that the average residential flood insurance policy starts at $112 a year. The maximum protection is $250,000 for the structure of the home and $100,000 for its contents.
4. Umbrella insurance
You were involved in a car accident and found at fault. The driver you struck was injured and now faces a $500,000 medical bill. You likely have a personal auto insurance policy with a bodily injury limit to help offset some of that cost — say $250,000. How will you come up with the other $250,000? And what if, three months down the line, the injured driver decides to sue?
An umbrella insurance policy is designed to protect you from the financial dangers of liability beyond what is covered in your current policies, such as your homeowners, boaters, or car insurance. Homeowners with a pool are usually advised to purchase umbrella insurance in case somebody gets hurt there. In addition to coverage for bodily injury or property damage, umbrella insurance also provides protection from certain lawsuits against you, such as slander, libel, false arrest, malicious prosecution, or mental anguish. It’s also a smart investment for landlords who own rental units.
Umbrella coverage can be purchased in million dollar increments, typically between $1 million and $5 million. The Insurance Information Institute estimates the cost for a $1 million policy to be between $100 and $300 per year. Note that umbrella coverage does not protect against damage you caused to your own property, business losses, contract violations, or legal issues stemming from an intentional criminal act.
5. Earthquake coverage
Most homeowners insurance policies don’t cover damage caused to your home by earthquakes. You might not think this is a risk worth insuring, especially if you don’t live in California, but the Insurance Information Institute says that 42 states are at risk of suffering earthquakes.
The cost of this insurance varies according to where you live, but earthquake insurance usually comes with a high deductible. The Insurance Information Institute says that the standard policy offered by the California Earthquake Authority comes with a deductible of 15 percent of a home’s replacement costs. This means if it would cost a homeowner in California $300,000 to replace a destroyed home, that owner would have to pay $45,000 before the insurance policy would kick in to cover the additional costs.
6. Home business insurance
Do you run a business out of your home? You might need additional coverage to protect it.
Insurers offer home-based business insurance that will help cover damages if someone visiting your home business is injured, your business inventory is damaged because of a fire or other disaster, or you have to shut down your business temporarily if your home is damaged. A policy can also provide liability insurance if you have employees working at your home.
7. Extra coverage for valuables
If you have a large amount of jewelry, collectibles, art, or furs in your home, you might consider buying additional coverage to protect yourself if these valuables are damaged or stolen.
The standard coverage offered by basic homeowners insurance might not provide the full replacement value for these items. To protect yourself, you can purchase a rider that will provide a coverage boost for these more expensive items.