What are the Coverages in a Homeowners Policy

Your home is your most valuable asset, so when shopping for homeowners insurance you should understand what the policy includes.  Most homeowner policies are package policies that provide protection for your home, any other buildings on your property, your personal property, and liability coverage if someone wants to sue you. Package policies also usually cover loss of use in the event of a loss.

Some policies offer what is called “all risk” coverage, which means that the policy will pay for anything that happens unless the contract excludes it. Other policies are what are known as “named perils” policies. The contract will pay for losses which occur when caused by the perils listed in the policy. Some of the most common perils  include fire, wind, lightning, hail, weight of ice and snow just to name a few. Be warned, however that typical homeowners policies do not include earthquake, though some will offer it as an optional additional coverage. None will cover flood. This has to be purchased on a separate policy. Any claims you file related to the property coverage on your policy are subject to the deductible that you choose.

The dwelling coverage

The dwelling is your home and anything permanently attached to your home. If the garage and a deck are attached, their value is included in the value of the home. How the company values your home is important. Most standard companies use a computer program which combines a variety of details about your home including the size, number of bathrooms, flooring, and other aspects that allow them to come up with a cost per square foot to replace your home if it were a total loss. This  is called “replacement cost” insurance and is the best. You can also purchase what is called a “market value” policy and you would be insuring only the market value of the property. Be sure to ask what type of policy you are being quoted.

The other structures coverage

This is a part of the package policy and will be given as a percentage of the value of the home. If the house is valued at 100000 then the other structures would be given as 10000 or 10% of the cost of the house. This takes care of a separate garage or an above ground pool, the fence around the yard and the tool shed. If you have greater value in other structures that the amount given, you can increase this coverage.

The personal property coverage

Make sure that you are getting replacement cost coverage for your personal property. Even is your couch is ten years old you want a new couch, not the new cost depreciated by how old it is. This coverage is the umbrella that includes everything you own that is not attached to your dwelling. It includes your clothing, furniture, house wares, children’s toys and the lawnmower in your garage. It will cover your personal property anywhere in the world when you vacation.

 The loss of use coverage or additional living expenses

This is a wonderful coverage. There is nothing worse than being put out of your home after a fire. The loss of use coverage will pay for you to stay in other housing such as a motel or apartment until you house is repaired or rebuilt and some even gives an allowance for food.  Some companies put a dollar amount as a maximum limit; other companies put a time limit such as 60 days.

Personal liability coverage

This is your protection for damage you do to someone else. It can be damage to your neighbor’s property or their reputation. This coverage responds with no deductible to pay for your neighbor’s window if you break it with a baseball. If you slander your neighbor’s reputation and he sues you, your liability coverage will defend you.

Medical payments coverage

The medical payments are for others, not for you or your family members. If your neighbor twists his ankle when walking in your yard, the medical payments will pay for his visit to the emergency room. If he decides to sure you for pain and suffering, then the claim would go to the liability portion of your policy.

Other special items, like jewelry and your daughter’s laptop can be added to a policy for a small extra premium.

Remember that insurance is regulated by each state and can vary greatly. Consult your local agent to best advise your insurance choices.