Generally, a homeowners insurance policy includes at least six different coverage parts. The names of the parts may vary by insurance company, but they typically are referred to as Dwelling, Other Structures, Personal Property, Loss of Use, Personal Liability and Medical Payments coverages. They are usually presented as policy sections and are often labeled Coverages A through F.
Coverage Parts A, B, and C protect property.
Coverage A:Dwelling
The homeowner policy's first coverage section protects your house and any attached structures, such as garages, decks, or fences. The typical policy covers your home when it is damaged by many perils (also known as causes of loss) including fires or storms. However, the following causes of loss are usually excluded from coverage under the homeowners policy:
- Earthquake
- Flood
- Faulty maintenance
- Damage from insects or vermin
- Wear and tear, gradual damage, or deterioration
Coverage B:Other Structures
This coverage section protects structures that are not attached to the home, such as a detached (separate) garage, storage or utility shed, playground equipment, and swimming pools.
Coverage C:Personal Property
This covers your possessions, whether they are at your home or away with you on vacation. Personal property is often covered on a named peril basis. This means that only the causes of loss listed in the policy section are covered. The coverage is also subject to limitations and exclusions. Types of property having significant value, such as jewelry, fine arts, collectibles, etc., may require special protection. Talk to your agent about scheduling (adding) coverage on a floater which broadens and extends coverage for high-valued possessions.
Actual Cash Value vs. Replacement Cost
Commonly, protection under sections A and B is provided on either an actual cash value or a replacement cost basis. Actual cash value is defined as replacement cost minus depreciation. Replacement cost is the actual cost to replace the structure, regardless of depreciation. Check your policy to see which type of coverage you have. Coverage under section C is usually provided on an actual cash basis. However, your agent may be able to add replacement cost to your possessions just like that found in Coverage A.
Coverage D:Loss of Use
This coverage handles the cost of additional living expenses while your home is being repaired. The coverage also applies if the home is unusable. However, the loss or loss of access has to be the result of an event that is covered by the policy. For instance, if your home was damaged during a war and you had to abandon it, Coverage D would not be available because war is excluded. Additional expenses normally include food, housing, and transportation. However, the expenses must exceed what your family normally incurs.
Coverage Parts E and Faddress coverage for injuries to persons or damage to property that belongs to others.
Coverage E:Personal Liability
This Coverage Part responds if you are legally responsible for causing property damage or physical injury. Protection includes paying for your defense costs and any financial judgment for covered incidents. Naturally the coverage would not apply for excluded situations, such as intentional injuries. Example: Joe is sued by a guy he injured after tackling and repeatedly punching him during a pickup basketball game. The injuries from this incident are not accidental and would not be covered.
Coverage F: Medical Payments
This Part provides rapid reimbursem*nt for minor injuries, such as a guest who trips and falls while visiting your home. This coverage does not apply to a family member. For example, if your child and your neighbor's child are both injured while playing and need to go to the emergency room, this coverage will pay for your neighbor's expenses but not for your own child.
This is a brief overview of homeowners insurance. All of the coverage provided by the homeowners policy is subject to limitations such as exclusions, policy limits, and deductibles. It's important that you discuss the details of coverage and any other insurance questions with your insurance agent.
FAQs
The names of the parts may vary by insurance company, but they typically are referred to as Dwelling, Other Structures, Personal Property, Loss of Use, Personal Liability and Medical Payments coverages. They are usually presented as policy sections and are often labeled Coverages A through F.
What is the liability portion of a homeowners insurance policy meant to cover responses? ›
Liability covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by your pets.
What is the most complete homeowners insurance policy coverage called? ›
Called a comprehensive policy, an HO-5 policy offers the highest level of insurance coverage for houses and belongings. It covers your house and belongings under all circ*mstances except those listed as exclusions in the policy. The exclusions for HO-5 policies are the same as those under an HO-3.
Which of the following is not covered by homeowners insurance? ›
Many things that aren't covered under your standard policy typically result from neglect and a failure to properly maintain the property. Termites and insect damage, bird or rodent damage, rust, rot, mold, and general wear and tear are not covered.
What is the most important part of homeowners insurance? ›
The most important part of homeowners insurance is the level of coverage. Avoid paying for more than you need.
What is not a usual component of the homeowners policy? ›
Many homeowners policies cover damage caused by "just about anything," unless specifically excluded. Most catastrophes are covered. For example, wind damage from hurricanes or tornadoes is covered as a windstorm peril. But, flood damage and earthquake damage are NOT covered by a standard homeowners policy.
Which area is not protected by most homeowners insurance? ›
These are the areas that are not protected by most home insurance.
- Flooding. ...
- Earthquakes. ...
- Business equipment. ...
- Jewelry or artwork. ...
- Power outages. ...
- Nuclear hazard. ...
- War. ...
- Dog bites. Most homeowner insurance covers medical bills and legal fees caused by dog bites.
A standard homeowners insurance policy covers the following:
- Dwelling Coverage.
- Other Structures Coverage.
- Personal Property Coverage.
- Loss of Use / Additional Living Expenses Coverage.
- Liability Coverage.
- Medical Payments to Others Coverage.
Section II traditionally covers bodily injury and property damage but not other personal injury claims, as you might assume. For example, your homeowners' policy won't cover claims for libel or slander.
Who is the most expensive homeowners insurance? ›
Travelers is the most expensive homeowners insurance company for $200,000, $350,000, $500,000 and $750,000 dwelling coverage amounts. Rates vary significantly among companies because they each have their own formulas for pricing. That means it's vital to comparison shop homeowners insurance quotes when buying a policy.
Coverage A covers your dwelling; coverage B is for other structures; coverage C is for personal property; coverage D is for loss of use; coverage E is for personal liability and coverage F is for medical payments.
What do most homeowners policies exclude coverage for? ›
Infestations
Bedbugs, termites, mice and other vermin are typically excluded from home insurance for the same reason wear and tear isn't covered. From an insurer's perspective, getting rid of infestations and fixing the damage left behind are simply part of maintaining your home. There may be occasional exceptions.
What are the common exclusions in a homeowners policy? ›
Standard homeowners insurance does NOT cover damage caused by flooding, earthquakes, termites, mold, or normal wear and tear. Learn about all the different home insurance exclusions and how to get covered.
What are four major exclusions found in homeowners insurance policies pertaining to real property? ›
Important: Read exclusions in your insurance contract.
Earthquake, flood, mold, earth movement, and “wear and tear” are some of the perils that are usually excluded. When an insurer writes your homeowners coverage, the insurer is legally obligated to offer you earthquake coverage for an additional premium.
What are examples of commonly covered and not covered homeowners insurance? ›
Damage or destruction due to vandalism, fire and certain natural disasters are all usually covered. So is your liability if someone is injured on your property. Certain catastrophes, like flooding or earthquakes, are generally not covered by basic homeowners policies and require specialized insurance.
What are the 4 parts of an insurance policy? ›
The Basics of an Insurance Contract
Declaration Page. Insuring Agreement. Exclusions. Conditions.
What are the three major parts of a homeowners policy? ›
Three basic levels of coverage exist: actual cash value, replacement cost, and extended replacement cost/value. Policy rates are largely determined by the insurer's risk that you'll file a claim; they assess this risk based on past claim history associated with the home, the neighborhood, and the home's condition.
What is the basic form of a homeowners policy? ›
The Homeowners Policy Basic Form 1 (HO 1) provides basic named perils coverage for direct damage to property, personal liability coverage, and medical payments to others coverage.
What are the four coverage parts that compose Section 1 of a homeowners policy? ›
The primary coverages are Coverage A - Dwelling, Coverage B - Structures, Coverage C - Contents, and Coverage D - Loss of Use.
