Getting the right property insurance is critical to protecting your home. Whenever your home suffers catastrophic damage, often the only way to stave off bankruptcy and fix your home, is to go through your homeowner’s insurance. But it is important that you understand exactly what is and is not covered by your policy. This post will go over the basics of property insurance and how things are valued.

Insurance covers four aspects. First, it protects your home. Second, it protects ancillary structures around your home (think the shed, fences, etc.) Third, it insures the contents of your home. Finally, you can receive compensation for the loss of use and enjoyment of your home.

Most policies will cover damage to your home caused by expected perils, which means you need to obtain special coverage for flood, sinkholes, and other catastrophic perils.

When you are looking for an insurance policy, it is critical that you base the value of the policy off of what it would cost to replace or rebuild your home ? not on the current value or mortgage price. If you base the policy on value, then the insurance policy will cover your home for the present value, less depreciation. For example, if your roof is insured and it has a 20-year useful lifespan (depreciation schedule), and you file a claim in year 17 of that use, your policy will cover you for the remaining three years of value.

You also want to cover your personal property for its replacement value, not the actual cost.

Homeowners insurance is critical to protecting your home. If you own a home in Florida and have questions about insurance, risk, and coverage, you may want to speak to a lawyer. An attorney can go over the unique risks that homes face in Florida from the slow creep of mold to the devastating hurricane. Your home is your primary investment and shelter, don’t risk it with subpar insurance protection.