Traditional homeowners insurance policies cover structural loss caused by lightning or fire. Personal property loss caused by a direct lightning hit is covered as well. Limitations apply when manufactured electricity (power lines and transformers) causes power surge damage. An annual homeowners policy review is the best way to confirm adequate insurance protection before a loss happens. Tips to keep in mind:

• Verify the replacement cost of your dwelling. Homeowners insurance is based on replacement cost, which is how much it takes to rebuild the house using like kind and quality materials. Depreciation (age, wear, and tear) is not a factor. it's best to insure your home for its full replacement cost. Insuring below replacement cost could result in a penalty on a partial loss.
• Damage to the dwelling is settled on a replacement cost basis. However, the payout on a partial loss is initially depreciated. Use this money to start repairs. The balance will be paid when work is complete.
• Verify adequate coverage on personal property (contents). Homeowners policies insure contents for 50 - 70 percent of the dwelling limit. Conduct a room-by-room personal property inventory to confirm this is enough protection. Review policy limitations on jewelry, high-value items, business equipment, and more. Personal property losses are insured for losses specifically identified in the policy (theft, fire, vandalism, etc.). Look for coverage gaps and talk to your insurance agent about buy-back coverage.
• Contents losses are settled on an actual cash value basis, which means the claim is reduced for depreciation. Most insurers offer contents replacement cost coverage for an additional fee. This endorsement changes loss settlement terms to pay the cost of replacing contents at the current value. Ask your insurance agent for cost and coverage specifics.