Standard policies for homeowners insurance include five coverage areas: dwelling, other structures, personal property, additional living expenses and liability. Documenting the value of your home and the items inside and outside your property will help should you need to access your homeowners insurance. Additionally, if you live in an area at risk for earthquakes or floods, check your policy, as these are typically excluded. Though hurricanes and tornadoes are covered, floods resulting from them are not, according to the Federal Alliance for Safe Homes Inc.
Insurance for dwelling is key to a homeowners policy, as it covers your actual home. This coverage is typically referred to as Coverage A and reimburses you for repairs should your home be damaged or destroyed. Policies should include language that you will receive “actual, full, or guaranteed replacement cost” of your dwelling to ensure true replacement cost of the home. You don’t want to under insure in this area, even if it significantly lowers your premium.
The definition of "other structures" in an average homeowners insurance policy includes any structure that is on your property but not connected to the actual house. Examples include detached garages, swimming pools and sheds. Many insurance companies refer to this coverage as Coverage B.
Personal property, the contents in your home, are covered if lost, damaged or stolen. Often referred to as Coverage C, this coverage usually applies to furniture, appliances and clothing. Policies may cover the full cost or a percentage of your personal property. Other items, as deemed by the homeowners insurance company, may not be covered, such as jewelry. Women often get their engagement ring appraised and have it insured under a special schedule, also called a floater, under their homeowners policy.
Additional Living Expenses
When a situation occurs that leaves you unable to live in your home, such as a fire, your homeowners insurance may cover your living expenses. The additional living expenses part of the homeowners insurance policy, also called Coverage D, covers hotel bills, food and other daily living expenses until you are back in your home.
If someone is injured on your property and decides to sue, the personal liability coverage of your homeowners insurance protects you against a lawsuit. The insurer will pay for legal fees and awards granted by the court to the injured parties. Average coverage amount is the sales price of your home per incident, according to the National Association of Realtors.
Francine Richards is a licensed multi-state insurance agent with years of human resources and insurance industry experience. Her work has appeared on Blue Cross Blue Shield websites and newsletters, the Houston Chronicle and The Nest. Richards holds a Bachelor of Arts in communications from the University of Maryland.