Long Islanders need to know what losses their homeowner’s insurance actually covers.

Many weather forecasters warn that Long Island is due for a major hurricane. Whether that happens or not - the best way to be prepared is to know beforehand what is covered under your homeowner’s insurance policy.

The National Association of Insurance Commissioners (NAIC) reports that most people misunderstand their homeowner’s insurance, believing the policy covers losses that it actually does not. Such losses that are not covered by a standard policy include flood, earthquakes, termites or other infestations, mold, and sewer and water line breaks on the property. If you want coverage for flood or earthquake damage, you actually need to have a separate insurance policy for these natural hazards.

Another misconception is the amount of coverage for losses of jewelry, antiques, and valuable collections (e.g., stamps, coins). A standard policy usually provides only a limited amount of coverage for these items. Any additional coverage needs to be added to the standard policy. Also, personal property and equipment that is used for business is not covered by the homeowner’s insurance.

The NAIC survey also found that most people misunderstand the type of coverage they have, actual cash value or replacement cost. Actual cash value takes into account depreciation when determining coverage. So, the actual coverage is reduced since depreciation is deducted from the cost to repair or replace damage to the home and its contents. Replacement cost doesn’t take depreciation into account, so you would get the actual amount it would take to replace, rebuild or repair damages.

It is important to find out exactly what your policy covers and to keep it up to date. Contact your insurance company to find out about adding coverage if you make any major home improvements (anything more than $5,000) and as you acquire more expensive items (e.g., furniture, computers, televisions and other electronics). It’s also good to have an inventory of all personal property, including photographs or videos of each room, and to save receipts for major purchases in a safe place outside the home.

The NAIC also recommends adding an umbrella policy to your liability coverage if you have items that would increase the risk of injury of people on your property, such as a trampoline or pool. And, if you use your home for business, make sure you purchase a separate business insurance policy.

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