Homeowner Policy Coverages
– Part 1

A homeowner policy is a protection package that provides coverage for your property, medical payments for others, and protection against claims someone else makes against you. This type of policy is available for primary residence homes occupied by the owners.

There are a wide variety of homeowner policies available, so be sure to read your policy to find out what coverage your insurance company provides. The following are some of the coverages that may be included in your policy:

Dwelling Coverage
This coverage provides for the repair or replacement of your damaged or destroyed home and attached structures, such as a garage or deck. Most homeowner policies provide replacement coverage. This coverage pays the actual cost to replace your home up to the limit of your policy. The amount of coverage is generally a percentage of the amount it would cost the insurance company to completely rebuild your home.

Some policies offer guaranteed replacement cost. Under this policy, the company will pay the full cost to replace your home, even if it is above the policy limit.

Before you have a loss, discuss with your agent or company how replacement costs work and the conditions of the policy limit for your specific coverage.

Coverage for Other Structures
This coverage provides for the repair or replacement of other permanent, separate, unattached structures on your property. The limit is typically 10 percent of the dwelling coverage. This coverage protects against a loss to a detached garage, personal workshop or attached fence. It usually will not provide coverage for other buildings on your property that renters occupy, or buildings you use for business. If you have an unusually large detached garage or several outbuildings on your property, you may need to buy additional coverage.

Personal Property Coverage
This coverage provides for repair or replacement of your furnishings and personal items, such as your TV, stereo, clothing, dishes, etc. The cost is usually 70 percent of the dwelling coverage for replacement costs, depending on your insurance company. Your replacement coverage is based on the used value until you actually replace the item. This means your insurance company will initially pay you for the used value of your item. After you buy the replacement item, your insurance company will pay you the difference between the used value and the actual replacement cost.

This coverage extends worldwide, but usually provides only up to 10 percent of the personal property coverage limit for property you take with you when you travel. You may be able to buy increased limits on personal property for an additional cost.

Insurance companies usually offer personal property coverage on a named peril basis. This means that the policy will specify and list the perils that trigger coverage. Commonly covered perils include fire, lightning, windstorm, hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism and malicious mischief, theft, and damage caused by falling objects.

Your policy may require specific coverage limits for specified property and perils. Ask your agent or insurer if you need to raise those limits.

Homeowner policies do have exclusions. For example, they do not cover a roommate’s or renter’s property, autos, and large boats. Also, check with your agent or insurer to see if you can buy replacement cost coverage on your personal property, or buy increased limits on jewelry, sports equipment, cameras, stamp and coin collections, computers, silver, and valuable artwork.