What’s In Your Homeowners Insurance Policy

termite You’ve done the responsible thing, and gotten a homeowners policy. This is a great way to provide yourself, and your family, with some protection in case your home is damaged, or your property is stolen. However, not all homeowners insurance policies are exactly the same. How much do you know about what is, and what is not, in your homeowners insurance policy?

Most homeowners policies contain five important types of coverage. The first section is Dwelling Insurance, which covers the cost of replacing the actual structure of the house, the garage, and possibly a storage shed. The second section covers Personal Property that is located inside the home itself. The easiest way to think about this part of homeowners insurance is to imagine there was a fire in your home. All those items that would be damaged or destroyed by the fire would need to be replaced. The Personal Property part of homeowners insurance is the part that provides that kind of protection.

The third part is Liability Insurance. In short, you need this in case someone comes to your home, becomes injured, and decides to sue you over it. This part helps pay for your court costs. Part Four , Medical Payments, goes nicely with the Liability Insurance. This is what pays for the medical bills of the person who was injured. The fifth part is called Loss of Use. If your home is damaged or destroyed to the point where you cannot live in it, the insurance covers the cost of your living expenses until things are repaired.

Many homeowners assume that their homeowners insurance automatically comes with all of those things. Not all of them will, so you really should read over the policy, and familiarize yourself with what you truly are covered for. Pay particular attention to see if your policy has the Loss of Use part. Some won’t help you cover those costs at all. Other policies will have a maximum amount that they will cover you for per day, and may also restrict the length of time that they will provide the coverage for. If you home isn’t repaired in that time, tough luck!

It is important to be aware of what the insurance company will give you to replace your property. If they are going to give you “replacement cost”, you may not be getting as much as you might expect. Let’s say that you purchased your TV, brand new, four years ago. If that TV is damaged or stolen, you probably figure that the insurance company will provide you with a new one. However, if the policy offers “replacement cost”, then the insurance company is only going to give you the amount of money it would take to buy that same, four year old model, today. It won’t be enough to get a brand new TV.

What if your home is eaten by termites? These little pests can cause thousands of dollars of damage, and make a home completely unlivable. You might assume that your homeowners insurance would cover repairs under the Dwelling Insurance part, and that it will also cover your living expenses while your home is being repaired. As stated above, not every policy includes Loss of Use. Most homeowners insurance policies will specifically exclude coverage of damage that is due to termites and other pests.

Image by Steve Ryan on Flickr