Have you ever read your homeowners insurance policy? Me neither. But you should probably break out the bifocals and scour the fine print, or a disaster could make you the proud owner of a costly pile of rubble.
While every policy is different, most standard policies cover losses from fire, lightning, tornadoes, windstorms, hail, explosions, smoke, vandalism and theft. Many will also reimburse you for damage caused by falling objects like tree limbs or even meteors.
This coverage accounts for a lot of potential threats, but it leaves out some big ones — namely floods and earthquakes. Insuring against these events requires additional policies and, of course, additional costs. If something did happen, though, boy, would you be glad to have them. Consider asking your agent about flood and earthquake insurance if you live in an area prone to such disasters.
Finally, it's important to understand that not all insurance is created equal. Here's one important distinction: Replacement cost coverage will reimburse you for what it actually costs to rebuild a house and replace its contents, while cash value coverage will compensate you only for the value of your property when it was damaged (minus deductibles). Also good to know: Many policies place caps on items like jewelry, computers, furs and firearms, so you might need to purchase additional coverage, called riders, to ensure those items are fully protected.
Make sure you have the proper insurance, or you might be up the river without a paddle — both literally and figuratively!