Warning: Your home insurance policy may contain more holes than Swiss cheese.
Home insurance frequently stops short of covering things like food that’s spoiled as a result of a power outage or a computer that's fried by a power surge. Richard Caughron, a senior product consultant at MetLife Auto & Home, suggests giving your home insurance policy a thorough read to find out which coverage you do have -- and which coverage holes you may need to fill.
Here are eight types of optional coverage that you may want to weigh for your home insurance.
1. Computer damage
Tim Dodge, a spokesman for Independent Insurance Agents & Brokers of New York, a trade group, says this option covers computer hardware, software and related components. A standard home insurance policy won't cover damage if, say, your computer is damaged by a power surge or spilled coffee. But an add-on to your policy will cover that type of damage. This extra layer of coverage should cost less than $100 a year, Dodge says.
You also can buy this type of coverage separately. It's sold by companies like ElectronicWarranty.com, SquareTrade.com and SafeWare.com. Prices vary.
2. ID theft
Insurers like MetLife and Liberty Mutual sell identity theft protection as a supplement to traditional home insurance. The annual cost, according to Dodge, is about $25. The deductible runs about $250.
What does this coverage offer? If, for instance, a cybercriminal steals your credit card numbers and makes thousands of dollars in unauthorized purchases, this coverage can help you pay to restore your "good name and credit history," Caughron says.
A standard limit for ID theft coverage is $15,000. Expenses that fall under that umbrella include replacement of income you lost because you had to take time off work to right the wrong. This coverage won't cover any unauthorized purchases, though; that's typically addressed by your credit card issuer.
3. Spoiled food
If fresh and frozen food goes bad because your refrigerator stops running during a power outage or simply goes on the fritz, optional "refrigerated contents" coverage can help you recover from this kitchen calamity. However, Dodge says, this coverage typically provides a small amount of money -- $500 to $1,500. And before collecting any money, you'd have to pay a deductible of about $100, Dodge says.
4. Content replacement
If you have coverage of $50,000 for your furniture and other household belongings but it would cost $75,000 to replace items damaged or destroyed in a fire or another covered disaster, you’d receive no more than $50,000. Standard home insurance policies reimburse you for the "actual" or depreciated cash value of your belongings. So if you forked over $1,000 a year ago for your flat-screen TV, it might be worth just $750 now, Caughron says, "and that’s all you’d get as long as your claim doesn’t exceed the policy amount."
With "replacement cost" coverage, you’d be given enough money to fully replace your lost items, Caughron says. The cost for this coverage varies widely; it's based largely on the amount of coverage you want.
5. Personal injury
Personal injury coverage pays for legal bills in case you’re sued for slander, libel or other similar issues; it doesn't refer to physical injuries. Dodge says he bought this coverage for himself for less than $20 a year after Long Island teenager sued Facebook and four of her former high school classmates in 2009. The $3 million lawsuit claimed the ex-classmates disparaged her on the social media site.
“The case against Facebook was thrown out, but the case against the teens was not," Dodge says. "Unless their parents had personal injury coverage, they had to pay for their lawyers and any settlement out of pocket."
This extra coverage may cost as little as $20 a year, Dodge says. Plus, there's no deductible.
6. Inflation protection
For an extra cost, an "inflation guard" increases the amount of your home insurance to keep up with inflation so that you can maintain adequate coverage to replace your home in case of a disaster. "It automatically adjusts the coverage limits when you renew your policy to reflect current construction costs in your area," says Loretta Worters, a spokeswoman for the nonprofit Insurance Information Institute.
7. Code upgrades
Caughron says "ordinance or law” is a type of coverage that "is not well understood by the general public."
Standard insurance normally won't pay for the extra costs associated with making sure your home meets new building codes or ordinances when it needs to be fixed. So if your community has imposed new rules about roofing or plumbing since your home was built, you'd have to pay for related upgrades out of your own pocket.
That's where "ordinance or law" coverage can come in handy. If your home is insured for $200,000 and you tack on this extra coverage, your policy generally would cover code or ordinance upgrades up to 10 percent of the insured amount, or $20,000. Higher coverage amounts are available; MetLife recommends "ordinance or law" coverage totaling at least 30 percent of the insured amount.
8. Water or sewage backups
One of a homeowner's biggest fears is coping with a sewer or drain backup or a non-pumping sump pump. You can ease those fears with what Caughron calls "one of the most important" coverage options available to homeowners.
Home insurers like Allstate and MetLife sell coverage to pay for repairing backup- or pump-related damage; coverage amounts range from $5,000 to $250,000. Of course, you'd have to pay a deductible if you file a claim.
"Higher coverage amounts are advisable if you have valuables in the area around drains and sump pumps on the lowest floor of the house,” Caughron says.