What Do the Types of Coverage Mean in Your Homeowners Policy?

The better your homeowners insurance coverage, the less you will have to pay out of your own pocket if disaster strikes. You will want to be protected for property and belongings, self-protection, and other requirements. You need enough liability coverage to protect yourself from lawsuits resulting from your negligence or events that could occur on your property. Your housing lender will also require you to cover the house for at least the amount of the mortgage or the replacement cost of the dwelling.

When you purchase a homeowners insurance policy, you’ll notice a number of different types of coverage listed within the overall policy. If you’re new to homeownership and insurance, you may not fully understand what these coverages mean. In this guide, we’ll explore the types of coverage available and what kinds of claims they will cover.

Types of Coverage in a Homeowners Insurance Policy

The following are types of coverage that are usually listed in your insurance policy. Keep in mind that these are only examples, and it’s important that you read your policy to know your exact coverage. 

  • Damage to House: Covers damage to the house. The face amount of the policy (for example $100,000) is the most you will receive if your house is totally destroyed. 
  • Other Structures: Covers damage to other structures or buildings (detached garage, work sheds, fencing, etc.).
  • Personal Property: Covers damage to, or loss of household contents and other personal belongings used, owned by you and your family. 
  • Additional Living Expense: Covers additional necessary living expenses when incurred, up to the stated limit, the normal standard of living when the house cannot be occupied due to a covered loss.
  • Comprehensive Personal Liability: Protects against claims arising from accidents to others on property that you own or rent. With a few exceptions, such as auto or boating accidents, it is an all-purpose liability policy that follows you wherever you go. 
  • Medical Expense: Limited to an amount per person and per accident for injuries occurring on your premises to persons other than an insured, or elsewhere, if caused by you, a member of your family, or your pets. Payment is made regardless of legal liability. 

Additional Coverages

The core coverages are not the only coverage options that homeowners have. There are also additional forms of coverage that can be purchased for further protection.

  • Extra Contents Coverage: Most of the coverages are a flat percentage of the amount of insurance on the home itself. For a minimal extra charge, you can increase the coverage on your contents without increasing the amount of insurance on the home itself.
  • Replacement Cost: A “Guaranteed Replacement Cost Coverage” for an additional premium may be available. The most important coverage that is usually offered is full replacement cost coverage on your roof with no deduction for depreciation.
  • Personal Property Extensions of coverage: Numerous other items are also typically limited to $500 or $1000 since the homeowners program is designed to fit the coverage needs of the average insured. Review the limitations placed on certain types of property with your homeowners insurance agent.
  • Additional Liability: You can also purchase additional liability coverage and medical payments coverage for a nominal premium.

What About Flood Insurance?

The most important exclusion is flood insurance, as many people have learned to their great misfortune. If you need flood coverage, any property/casualty insurance agent can help you get it. If you live in a flood-prone community, don’t risk going without flood insurance. Contact your homeowners insurance agent regarding flood coverage.

About Transparity Insurance Services

Transparity Insurance Services was founded for the purpose of helping clients to ensure their property and assets with no hassle. We are committed to providing a simple, easy, efficient, and positive experience to all of our clients, and prioritize open and transparent communication with our clients. Through our excellent customer service and technology, we can help you to find the right insurance program at a competitive price. Contact us today at (855) 889-2037 to learn more about what we can do for you.