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A standard homeowners
policy protects against fire, lightning, wind, storms, hail, explosions,
riots, aircraft wrecks, vehicle crashes, smoke, vandalism, theft,
breaking glass, falling objects, weight of snow or sleet, collapsing
buildings, freezing of plumbing fixtures, electrical damage and water
damage from plumbing, heating or air conditioning systems, according to
the Insurance Information Institute, a Washington, D.C.-based nonprofit
group for the insurance industry.
Such policies are "all-risk" policies, which
cover everything except earthquakes, floods, war and nuclear accidents.
A basic policy can be expanded to include additional
coverage, such as for floods and earthquakes and even workers'
compensation for servants or contractors. Home-based business-coverage,
an increasingly popular rider, does not cover liability associated with
the business.
Insurance experts recommend that homeowners obtain
insurance equal to the full replacement value of the home. On a
2,000-square-foot home, for example, if the replacement cost is $80 per
square foot, the house should be insured for at least $160,000.
For personal items, homeowners can increase their
coverage beyond the depreciated value of items such as televisions or
furniture by purchasing a "replacement-cost endorsement" on
personal property.
Some experts recommend an inflation rider, which
increases coverage as the home increases in value.
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