What is Homeowners Insurance?
Homeowners Insurance is an insurance policy designed to protect homeowners from the loss of, or damage to, their home. In the event of a covered claim, such as a fire, theft or hail damage, a homeowners insurance policy will provide financial protection to cover the cost of repairing or rebuilding your home. Standard homeowners insurance is comprised of 6 important types of coverage:
- Dwelling Coverage is a part of homeowners insurance that protects against financial loss to the physical structure of your home- meaning, the foundation, frame, walls and roof. The other coverage types (listed below) are expressed as a percentage of your dwelling coverage. The dwelling coverage you need for your specific homeowners insurance policy is calculated by taking into account the square footage of your home and local construction costs. (Use our Dwelling Coverage Calculator to determine your coverage needs).
- Other Structures Coverage protects the structures on your property other than your home including detached garages and sheds. Other Structures coverage is calculated as a percentage of dwelling coverage- typically around 10%. So, if you had $100,000 in dwelling coverage, your other structures coverage would be around $10,000.
- Contents Coverage is part of a homeowners insurance policy that provides protection for your belongings in the event they are stolen or lost in a covered claim. The amount of personal property coverage for a typical homeowners insurance policy is around 50%-70% of the dwelling coverage. So, if you had $100,000 in dwelling coverage, you could expect to have about $50,000-$70,000 in personal property coverage.
- Loss of Use Coverage provides financial assistance in the event that your home becomes uninhabitable because of a covered claim. For example, if your roof is damaged in a hail storm, loss of use coverage would pay for you and your family to live somewhere else while your home is being repaired or rebuilt. Loss of use coverage is typically calculated as 20% of your dwelling coverage.
- Personal Liability Coverage is part of a homeowners insurance policy that provides financial protection in the event you are presented with a lawsuit. You can select your personal liability protection typically in increments of $100,000.
- Medical Payment Coverage is part of a standard home owners insurance policy that offers payments if someone is injured on your property and you would like to help pay for their medical bills. Medical payment coverage, also known as MedPay, is only applicable in the event that you are not being sued for the injuries. MedPay coverage ranges from $1,000-$5,000 per incident.