Congratulations! You are about to become a first time homeowner. Next up, your mortgage company asks for proof of Homeowners Insurance. You contact your local insurance agent who sends over a homeowners insurance quote with a premium, but what does it mean?
Basic Coverage for a Standard Homeowners Insurance Policy
There are 4 main types of coverage on a standard Homeowners Insurance policy.
Dwelling Coverage
- This is the main part of the homeowners insurance policy that covers the dwelling or the house. This is usually referred to as Coverage A. For example, if your house was to burn down due to a fire, this is the part of the policy that covers the structure itself. However, this part of the policy does not cover your personal property.
Other Structures
- Also known as Coverage B, this part of the homeowners insurance policy covers “other” structures on your property. These are structures that are not attached to your house. Some examples of these would be; fence, detached garage or carport, or a storage building in your backyard.
Personal Property
- Simply put, this refers to your personal belongings. The items that are in your home. This would include your furniture, clothing, and other personal belongings. Most homeowners insurance policies cover your personal property when it is away from your home, but with certain limitations.
Loss of Use
- A commonly misunderstood part of the homeowners policy, but this part provides coverage for extra living expenses if you are displaced from your home. An example would be a fire occurs to your house. While the repairs are being made you and your family are unable to live in the home. Loss of Use would cover your hotel costs until you are able to move back into your home.
Liability
- This is a very important part of the homeowners policy. Liability coverage helps protect you, the homeowner, from bodily injury claims suffered by someone who is on your property. For example, you have some people over for a cookout. One of the attendees trips and falls on your patio suffering an injury. The Liability portion of the policy would respond in this situation.
Take Action
Purchasing homeowners insurance can be confusing, but working with a licensed insurance agent can help guide you through the process. Make sure you ask any questions you may have so that you understand the homeowners policy you are purchasing. Not all policies are the same.
