What Are the Basic Things Covered by Homeowners Insurance?

When buying a home, it’s essential to understand what your homeowners’ insurance covers. Often, many things should be included in a standard policy.

Some things to consider are personal property, loss of use, and liability protection. It’s also a good idea to get an inventory of all your possessions, which will help you determine the coverage you need.

Dwelling

Dwelling coverage, also known as Coverage A, is part of a home insurance policy that protects your house and any attached structures, like a garage or porch. It includes the cost of repairing or rebuilding your home after a covered peril, such as fire or smoke damage.

It pays for repairing or rebuilding your home and personal belongings after a disaster, such as a fire or a flood. It also covers additional living expenses, such as hotel bills or boarding fees for a pet while your home is being repaired.

Dwelling coverage also covers permanently attached appliances connected to public utilities, such as a stove or water heater. But this coverage is generally less robust than what’s included in standard homeowners policies.

Personal Property

Homeowners’ policies cover basic things like furniture, clothing, electronics, and other personal property in the home. If those things are damaged or stolen due to a covered peril, your insurance company will pay to repair or replace them.

Your belongings may be insured for either actual cash value, which takes depreciation into account, or replacement cost value, which pays the same amount it would take to replace them with new items. The type of coverage you choose will significantly impact how much you have to pay out-of-pocket after filing a claim.

A common way to ensure your belongings are covered is to create a home inventory. That way, if you ever need to file a claim, you have documentation of what was lost or stolen. It will also help you decide how much additional coverage to purchase.

Additional Living Expenses

In addition to covering the basics like property damage, liability claims, and fire restoration, home insurance also provides a way to reimburse you for things you can’t do at home. It is called additional living expenses (ALE).

ALE coverage pays for hotel stays, rent, food, and storage money when you are forced to leave your home due to a covered loss. It also covers the cost of emergency clothing, laundry services, and pet boarding.

The amount you receive will be a fraction of the expenses that your regular expenses would have cost you had you not been displaced from your home.

Often, policies limit how much you can be reimbursed for these extra costs. If your policy has a maximum, reviewing this limit early on is essential so that you can save money before the repair or rebuild is completed.

Liability

Liability coverage is included in most home insurance policies and protects you if someone is injured on your property or in your possession. It also covers the costs of damages and compensation if you or a family member is found liable for the injury.

Depending on the situation, this can include medical expenses, lost wages, and pain and suffering. Therefore, increasing your liability insurance limit may be a good idea.

A homeowner isn’t required to have homeowners insurance by law, but it’s an essential financial safety net that most people should have. In addition, it’s a wise investment that can pay to repair or rebuild your home after disasters occur.

This section of the policy helps pay your additional living expenses if you temporarily move out of your house while it’s being repaired. It can also help cover the cost of hotel rooms and restaurant meals if your home is too damaged after a disaster.