Here's a homeowners insurance pitch you should buy
The television commercial from insurance company Liberty Mutual depicts a house with no walls or roof -- just furniture and belongings -- under assault from a storm.
A beautiful custom kitchen, large flat-screen TV, a child's dollhouse and other possessions are blown around the home by high winds and drenched by a downpour.
The images are surprisingly powerful. The thought of losing our things is disheartening, even scary.
"Four walls and a roof is a structure," a soothing female voice announces. "What's inside is a home."
The ad is a pitch for Home Protector Plus, which promises to pay for rebuilding your house -- and replacing your possessions.
It's great marketing that hints that other homeowners insurance companies are cold and heartless.
They only want to give you lumber, drywall and shingles after a disaster. Liberty Mutual will sit you back down at your kitchen table for breakfast and give your daughter back her teddy bear.
But this type of insurance is hardly unique, even if it is essential. You can get similar protection from any number of homeowners insurance companies.
The specifics vary by company, but policies -- which range in coverage -- are typically based on industry standards established by the Insurance Services Organization.
Liberty Mutual sells an insurance policy that covers a wide range of perils, that provides replacement cost coverage for your contents and that pays for additional living expenses in case you have to live elsewhere while your home is being rebuilt.
In industry parlance, it's what's called a special form policy.
These "all risks" policies come with just a few coverage exceptions like flooding, earthquakes and acts of war. They insure your home’s structure and its contents and provide coverage for loss of use and personal liability.
Indeed, they are the most common type of homeowners policy.
But if you purchased your policy simply because it was a requirement of obtaining your mortgage, you might not have all this coverage.
Your mortgage lender doesn’t require you to purchase contents, loss of use or personal liability coverage. It only cares about your home’s structure.
But for a little more money, you can also protect everything of value inside your home.
Contents policies typically offer up to half of the structure replacement coverage.
So if you have a $200,000 policy on your structure, you’ll have at least $100,000 of contents coverage. It’s also common to have 20% coverage for loss of use, or $40,000 in this example.
A good contents policy will provide replacement cost coverage -- meaning that it will give you $1,000 to go out and buy a brand-new couch, not $100 because your destroyed couch was 15 years old and in declining value. The latter is called cash value coverage, and it’s not worth much.
While many companies offer this type of coverage, Liberty Mutual does offer a few perks, including:
- Help to locate the exact items, or the closest match, for your damaged items requiring replacement.
- A smartphone app to help you inventory your home’s contents.
- On-site protection during an emergency to prevent further damage for a covered loss, any day, any time.
Since many companies offer this type of coverage, you should get several quotes to find the best rate.
When you’re offered a policy, make sure to ask what is covered, what is excluded and at what additional cost you can purchase any coverage you want that’s not part of the basic policy.