Home Insurance Basics - Facts About Insuring Your Home

2009 December 27

When shopping for insurance, it is important to understand what you are getting when you purchase a home owner insurance policy. Knowing and understanding your home insurance policy coverages is important.

Home Owners Insurance Policy is designed to protect home owners against certain damages or losses.

It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home.

Home insurance coverage are made up of two parts: Property and Liability Protection.

Home Insurance Property Protection

Dwelling covers the value of the dwelling itself, not including the land; house, attached structures, fixtures in the house such as built-in appliances, plumbing, heating, permanently installed air conditioning systems, and electrical wiring. Typically, a coinsurance clause states that as long as the dwelling is insured to 80% of actual value, it will be replaced.

Other Structures Covers other structure around the property, such as garage, storage shed. Detached structures used for business purposes are not covered under a personal home owners insurance policy.

Personal Property covers personal property including the contents of your home and other personal items owned by you or family members. Home insurance policies may provide limited coverage for artwork, banknotes, bullion, coins, medals and jewelry. Typically 50 to 70% of Dwelling coverage is required for contents, which means that consumers may pay for much more insurance than necessary.

Loss of Use covers expenses associated with additional living expenses (rental expenses) and fair rental value, if part of the residence was rented, however only the rental income for the actual rent of the space not services provided such as utilities.

Additional Coverages Covers a variety of expenses such as debris removal, reasonable repairs, damage to trees and shrubs for certain named perils (excluding the most common causes of damage, wind and ice), fire department changes, removal of property, credit card / identity theft charges, loss assessment, collapse, landlord’s furnishing, and some building additions. These vary depending upon the form.

Exclusions In an open perils policy, specific exclusions will be stated in this section. These generally include earth movement, water damage, power failure, neglect, war, nuclear hazard, intentional loss, and concurrent causation

Home Insurance Liability Protection

Personal Liability provides coverage against a claim or lawsuit resulting from bodily injury or property damage to others caused by an accident on your property.

Medical Payments includes coverage to pay medical expenses for persons accidentally injured on your property regardless of fault.

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