House and Home Coverages

So, you want to insure your home. But you’re not sure what is covered under a standard policy.  What factors should you consider when evaluating potential risks?  How much is the right amount of coverage?  Read on to find out.

What does house and home insurance cover?

While homeowners insurance policies can differ and will vary on what specifically is covered in general, they will cover all or some of your financial losses related to your house and home. Ultimately it is up to the homeowner to decide how much coverage is necessary and determine all the specifics to include in a given package.

Here is a breakdown of the five most commonly included coverage areas in a homeowner’s insurance policy.

Dwelling Coverage

This portion of a home insurance package covers your physical home as well as any attached structures like a garage. Each policy will specifically define what types of losses are included called ‘covered peril’ that let you know what instances are qualifiable claims.

Common covered perils include:

• Fire and smoke damage
• Windstorms
• Hail
• Lightning strikes
• Vandalism and malicious destruction
• Theft
• Damage from a vehicle
• Damage caused by the weight of snow, sleet or ice
• Dwelling coverage isn’t just for the physical structure. It also covers wiring, plumbing, and heating and cooling systems.

*Keep in mind that policies vary and you will want to ensure you are comfortable with the situations outlined in your policy’s covered perils and make necessary additions if you feel it is best for you.

Other or Detached Property Coverage

This portion of a home insurance package covers qualifying detached structures on your property. This can include a detached garage, shed, barn or even fencing. Common covered perils for your “other property” are similar to those covered for your dwelling. 

Personal Property Coverage

Also called Contents Coverage, Personal Property Coverage is there to protect the contents and property within your home. Items commonly covered under a personal property claim include:

• Furniture
• Electronics
• Appliances
• Clothing

An important distinction in many contents coverage policies is how to value these items. Policy holders can opt to cover the replacement value of items or the actual cash value of the personal property. So, what is the difference? 

NOTE: Replacement, or reimbursement value reimburses you the full amount to replace items if they are stolen or damaged by a covered peril.  Actual cash value reimburses you the amount the items are worth now after factoring in depreciation on the items such as age or wear and tear.

There is a difference in cost associated with these two types of coverage so you’ll want to make the decision based on the assessed value of the items in question balanced with what it will cost to replace them. If you have important or particularly valuable items (jewelry, heirlooms, guns, memorabilia) it is best advised to make separate endorsements or riders for your policy to address those items individually.   

Liability Coverage

It may not be the first thing on your mind when you buy a home, but you are responsible for visitors when they are in your home and on your property. Liability coverage protects homeowners against claims arising from accidents to others. Liability coverage will not only cover a legal settlement but also your legal fees.

What happens when a delivery person slips on your sidewalk?  What happens when your dog bites the mailman? **Medical payments for guests who are injured in your home are not covered under liability claims and may require an addition coverage.

Additional living expenses (ALE) Coverage

In the event of a situation that causes your dwelling to become uninhabitable, you are protected with ALE coverage. Also known as loss of use coverage, this protection is necessary if your home is damaged to the extent that requires you and your family to live elsewhere during repairs.

Common things covered include the cost of hotel rooms and meals while being displaced. 

As always, find out what coverage is specified and determine any limitations or exclusions.

How much homeowners insurance do you need?

There is no short answer because there is no one-size-fits-all policy.  Armed with your research and due diligence to understand the value of your properties and their contents, you can make an educated decision to protect you and yours.

As you make these projections, ask – what is the worst-case scenario? What does a catastrophic, total destruction situation look like for your home?  What is a realistic number to rebuild, replace, and return your house and home to its current condition or equivalent? That is the number you want to aim for insuring.

Consider:

• Focus on your policy’s dwelling coverage for total replacement value, and you should get as close as possible to that number.             
• Most people calculate personal property coverage between 50% and 70% of the dwelling coverage.
• For liability coverage, most homeowner’s policies include $100,000 liability coverage, but up to $500,000 could be recommended depending on your situation.
• Additional living expense coverage is variable, but families should be comfortable with coverage at around 20% of the home’s replacement value.

If you are looking for more details about House and Home coverage, or how you can ensure your home insurance policy is current and you are protected, contact our office: