Home insurance is one of those policies most people buy and forget about it. It is often paid by a mortgage company and the frequency of claims is low, especially when compared to car insurance. However, home insurance is a complicated insurance policy that protects one of your largest assets. So, what exactly does home insurance cover?
Home Insurance Coverage Parts
The standard home insurance policy is divided into 2 sections with 5 total coverage parts:
Section 1 – Property Coverages
Coverage A – Dwelling
Dwelling coverage refers to your home and any attached structures, fixtures, installed appliances and systems such as HVAC, electrical, and plumbing. The amount of coverage provided is usually determined by calculating the estimated replacement cost of the home.
Coverage B – Other Structures
This coverage part protects structures on your premises that are not attached to the dwelling such as a shed, utility building, or detached garage. The coverage limit is typically 10% of what is provided for the dwelling.
Coverage C – Personal Property
This includes your personal belongings and the property of your family members that live with you. The coverage amount is typically 50-70% of the dwelling coverage. Certain types of belongings have restricted or limited coverage such jewelry, fine arts and antiques, firearms, cash, collections, and furs. Additional coverage can be purchased for these items, often called “floater” coverage.
Coverage D – Loss of Use
If your home is damaged by a covered peril and becomes uninhabitable, loss of use coverage will pay for the additional living expenses you incur. This can include the increased cost of meals, housing, and storage for your belongings. The insurance company is required to pay only the additional expenses that are above and beyond your normal expenses.
Section 2 – Liability Coverages
Coverage E – Personal Liability
If you are legally liable for injury or property damage to another person personal liability will provide for defense costs and damages. This coverage is subject to exclusions and limitations, such as claims intended to be covered by other insurance (motorized vehicles, business activities, watercraft, workers compensation). Intentional acts are also usually not covered by personal liability.
Coverage F – Medical Payments
This is sometimes known as “guest medical” and provides a small amount of coverage (usually between $1,000 and $5,000) of coverage for an injury that occurs on the premises, without regard to legal liability. Coverage does not apply to the insured or a regular resident of the home.
Understand Perils or Causes of Loss
Perils, otherwise known and causes of loss, are the bad things that can happen to your home and your personal property inside the home. The perils we commonly think of include fire, windstorm, smoke, vandalism, and theft. Depending on the type of home insurance policy you purchase, there are many other perils that might be afforded coverage. These include riot, aircraft and vehicle damage, volcanic eruption, falling objects, weight of ice and snow, and water damage (such as a ruptured pipe). The commonly written HO3 home insurance policy provides “all-risk” coverage to the home and other structures by stating:
We insure against risk of direct physical loss to the property described in Coverages A & B…
The HO3 policy then lists what specific perils are not covered, including vandalism to a vacant home, wear and tear, the release of pollutants, and subsidence. Further, every home insurance policy excludes water damage caused by flooding or a sewer or drain back up, earth movement or earthquake, war, neglect, nuclear hazard, and ordinance or law.
Other home insurance policies, such as the HO1 and HO2, provided named peril coverage for the dwelling.
Additional Home Insurance Coverage
There are myriad of additional types of coverage available on a home insurance policy such as:
- Replacement cost valuation for the dwelling and personal property
- Loss assessment coverage or increased coverage
- Personal injury coverage (slander, libel, defamation)
- Scheduled property or “floater” coverage for jewelry, arts, furs, and other high-value items
- Sewer or drain back up coverage
- Identity fraud or theft protection
- Coverage for homes in the course of construction or theft of building materials
Shopping for Home Insurance Coverage
We hope this blog article helps answer the question of what does home insurance cover. When shopping for the best home insurance rates we recommend contacting the professional team at Safeguard Insurance or getting an instant quote from our website. We work with several providers of affordable home insurance and can help you find the right coverage at the right price. Contact us today for a no-obligation quote!