Homeowners insurance protects your home, belongings, and financial security from disasters, theft, and liability. Understanding coverage types ensures you're properly protected without overpaying.

Standard Home Insurance Coverage

Dwelling Coverage (Coverage A)

Protects your home's structure:

  • Covers rebuilding costs if destroyed
  • Should equal cost to rebuild (not market value)
  • Includes attached structures (garage, deck)
  • Covers specific perils in your policy

Other Structures (Coverage B)

  • Detached garage, shed, fence
  • Typically 10% of dwelling coverage
  • Separate structures on property

Personal Property (Coverage C)

  • Covers belongings inside home
  • Furniture, electronics, clothing, etc.
  • Typically 50-70% of dwelling coverage
  • May have limits on specific items (jewelry, electronics)

Loss of Use (Coverage D)

  • Covers living expenses if home is uninhabitable
  • Hotel, restaurant meals, temporary rental
  • Typically 20% of dwelling coverage

Liability (Coverage E)

  • Covers lawsuits if someone is injured on your property
  • Legal defense costs included
  • Typical limits: $100,000-$300,000
  • Consider umbrella insurance for more protection

Medical Payments (Coverage F)

  • Pays others' medical bills for minor injuries
  • No lawsuit or fault determination needed
  • Typical limit: $1,000-$5,000

What's Not Covered

Standard policies typically exclude:

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  • Floods: Require separate flood insurance
  • Earthquakes: Require separate policy
  • Maintenance issues: Gradual damage, wear and tear
  • Certain dog breeds: Some policies exclude specific breeds
  • Home business: May need additional coverage
  • High-value items: May need scheduled coverage

Replacement Cost vs. Actual Cash Value

Replacement Cost

  • Pays to replace items at current prices
  • No depreciation deduction
  • Higher premiums but better protection
  • Recommended for most homeowners

Actual Cash Value

  • Pays replacement cost minus depreciation
  • 5-year-old TV paid at depreciated value
  • Lower premiums but less coverage

How Much Home Insurance Do You Need?

Dwelling Coverage

Calculate rebuilding cost (not market value):

  • Local construction costs per square foot
  • Materials and finishes in your home
  • Consider extended/guaranteed replacement cost endorsements

Personal Property

Create home inventory:

  • Document all belongings with photos/video
  • Keep receipts for valuable items
  • Schedule high-value items separately (jewelry, art)

Liability

Consider your assets and risk:

  • $300,000 minimum recommended
  • Higher if you have significant assets
  • Add umbrella policy for additional protection

Factors Affecting Home Insurance Costs

  • Location: Crime rates, weather risks, fire protection
  • Home characteristics: Age, size, construction type
  • Coverage amounts: More coverage costs more
  • Deductible: Higher deductibles lower premiums
  • Claims history: Previous claims increase rates
  • Credit score: Lower scores mean higher rates
  • Roof condition: Older roofs cost more to insure

How to Save on Home Insurance

  • Bundle with auto insurance
  • Increase deductible
  • Install security systems and smoke detectors
  • Update electrical, plumbing, roof
  • Shop and compare annually
  • Ask about discounts (claims-free, loyalty, etc.)
  • Review coverage—don't over-insure

Filing a Home Insurance Claim

  1. Document damage thoroughly (photos, video)
  2. Make temporary repairs to prevent further damage
  3. Contact insurer promptly
  4. Meet with adjuster
  5. Get repair estimates
  6. Understand your deductible and coverage limits