Understanding Your Home Insurance Policy
But, that’s not all. It can also help cover the costs of a lawsuit, help you pay for somewhere else to live when your home is uninhabitable and much more.
Home insurance is typically very comprehensive, but all policies have exclusions and coverage limits. It’s vital to know what those are so you know what’s covered and what’s not. Fire damage? Typically covered. Flood damage? Typically not.
With this guide, you can begin to understand what a typical home insurance policy covers. Just keep in mind that coverages vary from carrier to carrier, region to region and even policy to policy. Only your individual home policy can tell you the coverages you have and those you don’t. For an even better understanding of your home policy coverages, review them with your local insurance agent.
What Home Insurance Covers
The typical homeowners insurance policy has six type of coverages. They are commonly known as:
- Coverage A: Dwelling, for damage to your house that
occurs due to covered losses, such as a fire. Following a covered loss,
dwelling coverage helps you repair or rebuild your home, including the
structures, such as a garage or a deck, attached to it.
- Coverage B: Other Structures, for damage to other
buildings or structures on your property that result from a covered
loss, such as a tornado. This may include a detached garage, a barn or a
- Coverage C: Personal Property, for damage to or loss,
including theft, of your personal belongings and possessions, such as
jewelry, furniture, guns and other valuables. If you experience a
covered loss, this coverage will help you replace items up to the
defined dollar limit in your policy. In certain instances, your
belongings may be worth more than the typical home insurance policy
covers. In this case, you may be able to purchase additional coverage
through a process known as scheduling valuables. To help expedite a personal property claim, it helps to keep an updated home inventory of your belongings.
- Coverage D: Additional Living Expenses, for costs
incurred, up to your set policy limit, due to “loss of use” of your
home, meaning your home has been damaged to the extent that you cannot
live in it and you need to live elsewhere. This coverage helps you
handle the costs of your temporary housing and related expenses.
- Coverage E: Personal Liability, for damage to other
people’s property for which you are responsible. This coverage may also
help you handle legal costs and liability judgments resulting from a
lawsuit, up to the defined dollar amounts outlined in your policy.
- Coverage F: Medical Payments to Others, for bodily injuries to other people, such as a houseguest, that occur in your home or on your property. Like personal liability coverage, this coverage helps with the costs of a lawsuit or legal decision, up to your defined policy limits.
What Home Insurance Doesn’t Cover
It’s just as important to know what your homeowners insurance doesn’t cover as it is to know what your home policy does cover. For starters, your policy does not cover any damage or repairs costing less than your deductible. It also does not cover any costs that exceed the coverage limits outlined in your policy. You are solely responsible for excess costs, unless you have an umbrella policy to provide additional liability coverage for a covered loss.
More than likely, your policy also does not cover routine maintenance and repairs, as well as damage due to animals, termites, floods, earthquakes, sinkholes, sewer backups and other incidents. These are often considered non-covered losses. If you experience a non-covered loss, as outlined by your policy, you will be responsible for the costs.
What Home Insurance May Cover
Outside of the typicalhome insurance coverages, optional or separate coverage may be available from your carrier or from a different carrier. For example, you may be able to purchase earthquake or flood coverage separate from your homeowners policy.
Other coverages are optional add-ons to your existing homeowners insurance. These can include identity protection and equipment breakdown coverage, which covers the cost to repair or replace a range of appliances and other equipment, such as pool equipment, in your home. If this sounds similar to an extended appliance warranty, it is. The difference is that you can insure an array of appliances at once through this optional coverage rather than purchasing a separate warranty for each one.
This guide is a starting point for understanding your home insurance policy. Your own policy may vary greatly from the descriptions above depending on the state where you live, your carrier and the coverages you have selected. So take a close look at your policy by reviewing your documents or viewing your coverages online. Or, even better, come see us so we can explain your coverages in detail, as well as discuss whether your policy provides adequate protection for your home, property and belongings.
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