How to Read Your Home Insurance Policy

It is important that every homeowner understand their homeowner’s insurance policy. However, these policies are often full of jargon, making them difficult to understand. We are here to break down the parts of a homeowner’s policy and make it easy for you to know how you are covered!

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What is Coverage A: Dwelling?

This is the maximum about the insurance company will pay to replace your home in the event of a total loss. This is usually determined by a replacement cost estimator completed by your agent. It is important that you provide accurate information regarding your home to ensure your dwelling amount is correct.  If you have a total loss, once the dwelling amount is exhausted, you may be responsible for paying to fix the remainder of your home.

 

Most carriers offer “Extended Replacement Cost”. This gives you an additional percentage of Coverage A (usually 25% or 50%) over and above the dwelling amount. This is available should the cost to replace your home be more than the limit of Coverage A. This gives you nice protection from the rising cost of rebuilding a home.

What is Coverage B: Other Structures?

 

This is an additional amount (usually a percentage of Coverage A) that will cover replacement of other structures on the property. This can be things like fences, sheds, detached garages, driveways, and swimming pools. The coverage B limit is usually a default amount. Make sure you let your agent know if you have any exceptional structures that might exceed your limit of coverage.

What is Coverage C: Personal Property?

Personal property is all the items inside your home. The easiest way to think about personal property is that it would be everything you would take with you when you move. These things can add up quickly. It is important to consider furniture, appliances, clothing, and everything in between. Some high value items require additional limits or “scheduling” to be covered. If you have expensive jewelry, art, silverware, guns, musical instruments, or antiques, be sure to let your agent know to ensure these items are covered.

 

You also want to ensure that your agent selects “replacement cost” coverage for your personal property. With this selection, you would have the coverage to replace your items, not counting depreciation.

What is Coverage D: Loss of Use?

 

Coverage D pays for expenses incurred when your home is unable to be lived in due to a covered loss. For instance, if your home burned down, coverage D would cover the cost of another place for your family to reside while your home was being repaired. Coverage D does not usually include mortgage payments; however some companies offer this as an additional endorsement. 

What is Coverage E: Personal Liability?

Coverage E is one of your most important coverage amounts. It protects you in the event you are sued. For example, if someone falls and hurts themselves on your property or your dog bites someone. You want your personal liability amount to be as high as you can afford. Unfortunately, you do not have to be a millionaire to be sued like one.

 

Also, look at adding an umbrella policy that serves as excess liability coverage over your homeowners, auto, and any other personal insurance policies. This gives you extra coverage in the event of a large liability claim that may be over your coverage E limit. 

What is Coverage F: Medical Payments to Others?

 

Coverage F serves as additional coverage to help pay for small injuries that happen to guests on your property. This coverage is usually between $1,000 and $5,000 and is simply designed mitigate smaller claims before they turn into lawsuits.  

If you have more questions about your home insurance policy, please give us a call at 615-919-1009 and we are happy to help!