There are Six Parts to a Homeowners Policy. Do you have the right amounts in the right parts?
There are 6 primary coverage sections to your home insurance policy. In another article, we talked about the six different basic types of policies. In this one, we’re going to talk about the different coverage parts. Understand, depending on the type of policy you have and what you have purchased, you may not have all of these, but for this conversation, we’re going to talk about a homeowner policy, and it will have all six of these different pieces to it.
The Six Coverage Parts:
- Coverage A: Dwelling
- Coverage B: Other Structures
- Coverage C: Personal Property
- Coverage D: Loss of Use
- Coverage E: Liability
- Coverage F: Medical Payments
Coverage A: Dwelling
The primary coverage part is your Dwelling or home limits. It is called Coverage A.
So coverage A is your dwelling. That’s the actual house itself. That’s the structure: including the wall, floor coverings, the ceiling, the appliances installed, such as your central heating and air conditioning system, all of that’s included inside that dwelling.
The Dwelling limit is used to set the maximum amount the insurance company will pay to repair or replace your home; it is also used as a rule to suggest limits for the other property coverages. The other property coverages will be a percentage of the dwelling limit unless you change them.
Copverage B: Other Structures
Coverage B is the next one that’s listed on your policy. The suggested limit is 10% of the Dwelling limit. For example. If you have $200,000 for your Dwelling Limits then you suggested Other Structures limit would be $20,000.
Exactly what are other structures? That’s going to be buildings other than the dwelling. Examples would be a shed, fence, satellite dish, gazebo, swimming pool, and etc.
The limits offered automatically is a suggested amount. Potentially you may need higher limits than what is suggested by the policy. If you believe you need more, ask for higher limits.
Coverage C: Personal Property
You may also refer to this as Contents Coverage, but that is a little misleading.
Think of it as in all of your personal property. This will include your clothes, furniture, televisions, electronics, collectibles, guns, tools, lawnmowers, outdoor toys for your children, food, etc.
Something to keep in mind, all homeowner policies have lower limits on items that could be described as either hard to replace or high theft items. Some of those items are guns, jewelry, silverware, stamps, and the like. If you have any of these, make sure your agent knows. Then they can acquire the proper insurance for you.
The automatically suggested amount is 50% of Coverage A. Keep in mind this is an automatically recommended amount that you can request to be increased or decreased.
Coverage D: Loss of Use
Loss of Use is a coverage that a lot of people don’t understand, and in the time of a claim, this coverage could save you from a financial disaster.
This part of the policy provides you with living expenses (money) if your home is not livable because of a covered claim. This is money, so “I don’t have to live temporarily with my in-laws while my home is being fixed” insurance.
This part of the policy will provide expense money for the following: rent, utilities, additional food costs, additional travel costs, and other additional expenses due to you being displaced while your home is being repaired.
Now, all of us have friends and family that would offer to have us stay with them if something bad happened, but do you really want to stay a month or longer with family or friends if you don’t have to?
The automatic suggest limit here is 20% of the Dwelling limit.
Coverage 3: Liability
We’re moving out of the property coverages and moving into what’s called the liability coverages. This is a third-part coverage. You are buying this part of the policy to protect you if you harm someone else or to their property.
This coverage will pay for bodily injury, medical bills, rehabilitation services, property damage repairs, and replacements for other people you are found to be liable for. This will also provide an attorney for you and legal defense in court.
Coverage F: Medical Payments
Medical payments coverage is the part of a home insurance policy that covers you if a guest is injured at your home, whether you’re to blame or not. Medical payments coverage is meant for small claims.
This is a no-fault coverage that’s included under your policy. Limits range from $1,000 – $10,000.
That’s the six different coverages that you can find inside of your homeowner policy. Under a homeowner’s policy, these come as a package with limits automatically suggested. Keep in mind that these are suggested limits that can be increased or decreased.
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Beaux Pilgrim, CEO