What is Homeowner's Insurance?

A Coverage Summary

When you purchase homeowner's insurance it pays to know as much as you can about the insurance products you are comparing. Coverage from one quote to another can vary greatly and you may find that a policy that costs far less offers far less protection to you and may not be worth the purported savings.

Damage to Your Property

A homeowner's policy typically covers your house first. This is referred to as "Coverage A - Building" on your policy. It is designed to cover the structure, as well as all interior and exterior finishes including carpets, cabinets, siding, windows, and doors. Different types of policies will cover different types of damage.

This policy will also cover buildings on your property other than the house. This is typically called "Coverage C - Other Structures". This will cover garages, small barns and sheds.

There is also coverage for the things inside your home that are not attached to the building such as furniture, clothes, electronics, or food.

Another important coverage afforded by your homeowner's insurance policy is the "Additional Living Expense" coverage. This pays the cost for you to live in a temporary residence while your home is repaired if it is rendered uninhabitable by the loss.

Each policy will have a deductible that will apply to any losses under this section. The deductible is an amount that you will have to pay toward a loss before the insurance company pays.

Injuries to People

A homeowner's policy contains a liability section that deals with injuries to others. There are two parts to this section. The first part protects you if you injure someone or cause damage to someone else's property. It pays them on your behalf only when you were negligent and caused an accident.

The second part is called "Medical Payments". This section pays for medical bills to people that sustain an injury on your party regardless of liability. In other words, you do not have to be at fault, or negligent, for this coverage to apply. The dollar limit of Medical Payments coverage is often very low and is simply offered as a convenience type of coverage to aid in a person's medical bills.

If you are a policyholder, no payments can ever be made directly to you for injury you sustain. Under this section of coverage, the only benefit to the insured is that the policy will pay others on the insured's behalf.

When shopping for insurance products it is important to understand that insurance policies can vary in coverage and in cost. Educating yourself on the coverage basics is a good way to ensure that you are getting the best bang for your buck.

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