Homeowners insurance is something most homeowners need. Even if it’s not required, a policy is highly recommended. Finding out your coverage isn’t enough during the claims process is too late to realize your mistake. Get to know your homeowners policy before you need to make a claim.
Part A — Dwelling
A dwelling is your home. This policy coverage is intended to pay for most any damage to your home and most any structure attached to your home (e.g., garages, storage units) caused by a covered reason for loss. Reasons include incidents like fire, hail, theft, falling objects, or rupturing or sudden and accidental overflow of plumbing, for example. This includes damage to a variety of fixtures such as plumbing, electrical wiring, heating and air-conditioning systems.
When you take out a homeowners insurance policy, it’s up to you to choose the dollar amount of coverage on your dwelling. A common estimate of your coverage amount is based on the replacement value of your home — that’s the minimum that should be purchased. The dwelling coverage should be re-evaluated every year and changed as necessary to account for the appreciation of your home. If your home is financed, your mortgage company may have a coverage requirement you need to satisfy for the lender; this coverage requirement is to protect both you and them.
Part B — Other structures
This coverage pays for damages to structures not attached to your home, such as fences, tool sheds, detached garages and guest houses. Other structure coverage is typically 10 percent of your dwelling coverage limit. However, your needs may differ based on your situation. Make sure the coverage percentage fits the amount you need.
Part C — Personal property
Personal property coverage protects your stuff. Part C reimburses you for the value of your possessions including furniture, electronics, appliances and clothing. Your possessions are covered whether they are on your property, in a self-storage container or with your child at college. This coverage is normally 50 percent of your dwelling coverage limit but can vary as needed.
If there are personal items you want specific coverage for like jewelry, art or collectibles, you can add additional coverage to your policy through riders. These additional riders will only add coverage for the specific item it’s listed for. Be prepared to provide your insurance company with an official appraisal of the item to verify its replacement value.
Homeowners insurance coverage and typical costs
|Type of coverage||Typical cost|
|Part A — Dwelling||Based on the replacement value of your home|
|Part B — Other structures||10% of your dwelling coverage limit|
|Part C — Personal property||50% of your dwelling coverage|
|Part D — Loss of use||20% of your dwelling coverage|
|Part E — Personal liability||Choose the level you think best|
|Part F — Medical payments||Choose the level you think best|
Part D — Loss of use
If you’re displaced after a fire or flood, for example, your loss of use coverage pays for some of your living expenses if you’re unable to stay in your home during repairs.
This coverage is normally 20 percent of your dwelling coverage limit. However, the percentage may be different on your policy.
Part E — Personal liability
If someone were to have an accident on your property, you could be liable. That’s where liability coverage can protect you against claims arising from accidents to others on your property. You choose the level of coverage you think is best. Like auto insurance, your premium may change depending on the dollar amount you choose.
Part F — Medical payments
That friend who slipped and broke a leg stepping off your porch? You could be responsible for his medical bills. Part F pays for the medical bills if someone were hurt on your property or by your pet.
Again, you choose the amount of coverage that works for you. Keep in mind your premium may change depending on the dollar amount you choose.
Policies can be complicated, whether this is your first time buying a homeowners policy or you’re looking for a new homeowners insurance carrier. LGFCU can help you every step of the way with a homeowners insurance policy at a cost you can afford.
The advice provided is for informational purposes only.