Homeowners Policy Overview & Description:
Coverage Example: Amount of Section I - Property Protection Insurance Dwelling $299,500 Other Structures $59,900 Personal Property $224,625 Loss of Use Actual Loss up to 12 months Section II - Liability Protection Personal Liability $300,000 Medical Payments to Others $5,000 Deductible $1,000
This section shows the Coverage Limit you have for the Dwelling or structure itself if a covered loss occurs. We strongly recommend a policy which covers your Dwelling on a Guaranteed Replacement Cost or Replacement Cost Basis. (An ACV or Actual Cash Value policy brings depreciation into the picture and will not provide you with enough coverage to "replace" what was lost). Your home should be insured based on the cost to "replace" it not based upon what you paid for the house or what the current fair market value is. Your concern should be the ability to rebuild your house if it were completely destroyed.
Other Structures (sometimes referred to as Dwelling Extension)
This section shows you the Coverage Limit for other structures separated from the Dwelling such as garages, fences, shelters, tool sheds and carports. This coverage amount is generally calculated by default as a percentage of the Dwelling coverage amount (in the example above 20% - $299,500 x 20% = $59,900)
This section shows you the Coverage Limit for personal property owned by the insured (or anyone the insurance policy protects - family members etc). Please know that this section usually contains Special Limits of Insurance for certain types of property and arising from certain perils. For example - your Personal Property coverage limit would generally not cover a stolen ring with a value of $10,000. Most policies limit theft of jewelry, guns etc to $1,500 or $3,000 per item for theft, misplacing or losing. You should carefully review your policy to see if there may be higher value items that you may need to Schedule (insure the item individually/specifically) for an additional charge.
Loss of Use
This coverage may be shown as a dollar amount or based on a period of time such as 12 or 24 months. This coverage part provides coverage if a Loss makes your residence uninhabitable. The insurance company will pay reasonable additional living expenses while you are forced to reside elsewhere (this may include hotel, apartment, rental house and additional expenses for dining and laundry service since you are not able to do so in your residence)
This sections shows the Coverage Limit for sums the insured may become legally obligated to pay as damages because of Bodily Injury Liability and Property Damage Liability and with come policies Personal Injury Liability caused by an offense committed by the insured. This section also provides the insured with defense (legal fees) coverage related to these liabilities.
Also known as guest medical, this shows the Coverage Limit (without regard to fault or legal liability) for medical expenses as a result of bodily injury for guests as a result of an incident, accident, occurrence. If more expenses are incurred than are provided for in this coverage part then the Personal Liability portion of the policy comes into play.
The amount you/the insured must pay before the insurance company begins paying for a loss. In some cases, when the Dwelling is a total loss the deductible will not apply. In the example above the insured pays the first $1,000 and then the insurance company begins paying.
There are additional coverages, options and endorsements that are very important but beyond the scope of this overview.