Despite the impact the recession has had on our economy, home sales are through the roof due to some of the lowest mortgage rates we’ve seen in three decades. If you are like thousands of Americans taking advantage of these low rates and purchasing your first home or if you are a long time homeowner, here’s the uncomplicated down low on what to expect and what not to expect with a basic home insurance policy. Plus, suggestions for additional coverage that might be exactly what you need.

If you are in the first-time home buyer category here is the first thing you need to know; you’ll be required to get a basic or standard homeowner insurance policy by your mortgage lender. Don’t assume that this will be sufficient; you may have special coverage needs because of where you live, what you own or what you plan on doing. Points 1 to 3 detail what is covered with basic home insurance.

1. Structural damage done to the structure of your home and any other structure on your property caused by theft, smoke and frozen pipes. Also covered; extensive damage caused by fire, lightening, ice and snow and the cost of having to stay in a hotel and eat out due to these bad lucks. 

Not covered; gradual wear-and-tear considered to be maintenance, flood and earthquake damage. If you live in a Special Flood Hazard Area (SFHA) you’ll be required by law to get flood insurance. In a low risk area the choice is up to you. 25% of all claims paid out by the National Flood Insurance Program are in low to moderate risk areas, but the choice remains yours. You may not even be able to get flood insurance if you have a beach front home or live in an area where hurricanes or flash flood are know to occur. Flood insurance is recommended in recognized flood zone areas where there is no dam. What many people do not know about earthquake insurance is that it covers different types of earth movements not just earthquakes such as landslides which can cause your home to be greatly damaged by large falling rocks and trees. Earthquake insurance is highly recommended if you live in an earthquake prone area.

2. Personal property covers the contents of your home even when abroad. This means because your camera falls under personal property it’s covered even if it is stolen while vacationing in Europe. It’s very useful to annually take inventory of your possessions with a video or camera and keep all bills in a location other than your home not only as proof of ownership but also to help you determine the total value of your personal property in order to get the right amount for your home insurance.

Not covered; expensive items like art, antiques, jewelry or collectables among others, require a specialized policies called floaters.

3. Liability covers lawsuits; court costs included, and any injuries sustained by someone on your property and their medical costs up to the insurance maximum. If you plan on doing repairs or renovations you may want to review the liability portion of your homeowner’s policy due to increased activity and therefore greater possibility of injury and liability that comes with repairs and renovations.

Hopefully now you know whether or not standard homeowner insurance is right for your situation or if floaters and other disaster coverage are necessary. A common mistake is to over insure by including the land your home is built on; land does not need coverage and therefore should not be included in your calculations.