Your home might be your most expensive asset and it’s important for you to properly protect it from the unexpected. There are many parts of a homeowners insurance policy to consider.
The Dwelling coverage, sometimes referred to as Coverage A, is part of your Homeowners Insurance policy which pays to repair damage to the structure of your home. This includes the actual structure plus items permanently attached to the structure such as kitchen cabinetry, wall-to-wall carpeting, and bathroom fixtures.
The Detached Structures coverage, sometimes referred to as Coverage B or Other Structures, is the coverage that pays to repair damage to structures on your property other than your home. This includes structures such as detached garages and sheds.
The Personal Property coverage, sometimes referred to as Coverage C or Contents coverage, is the coverage that pays for all of your “stuff”. We like to say that it covers the stuff that would fall out if you flipped your house upside down and shook it. This coverage includes items such as your furniture, clothing, electronics, and other items not permanently attached to the structure of your home.
Additional Living Expenses
The Additional Living Expenses coverage, sometimes referred to as Coverage D or Loss of Use coverage, helps pay for additional expenses that you may incur if you have to live elsewhere while your home is being repaired due to a covered loss. For example, if your home sustains extensive damage from a fire or water loss and you have to stay in a hotel or rent another home while your home is being repaired, this coverage will help pay those additional expenses.
The Liability coverage, sometimes referred to as Coverage E, helps protect your assets if you’re responsible for bills related to injuries or property damage to someone else caused by you or a member of your household. People commonly think of swimming pools and trampolines but there are countless ways that you could be financially responsible to someone else and the liability coverage helps protect you from these risks.
The Medical Payments coverage, sometimes referred to as Coverage F, can help pay for smaller injuries that your guests may sustain on your property even if you’re not at fault. Maybe a guest trips over a tree root in your yard and breaks their ankle. They may look to you to help compensate them for high health insurance deductibles as an example, and Medical Payments coverage can help pay for those expenses.
There are many optional coverages available which include Building Codes Coverage, Loss Assessments, Water/Sewer Backup and others that should be discussed when customizing your homeowners insurance policy.
Replacement Cost vs. Actual Cash Value
The two main claim settlement options are Replacement Cost (RC) and Actual Cash Value (ACV). With RC coverage, the insurance company will pay the cost to replace the damaged property (if you choose to replace it). This means that if you have a 10-year-old couch that you originally paid $1,000 for, and a comparable brand new one would cost $1,500; a RC policy would pay you $1,500 if you purchased a new one. With ACV coverage, the policy would pay the current value of the items which means that they would be depreciated. So, in the same example, your 10-year-old couch that you originally paid $1,000 for may only be worth $150 today and, if that’s the case, the policy would only pay you $150 for it. As you can see, there is a huge difference between Replacement Cost and Actual Cash Value claim settlement options. Most home insurance policies we offer will provide Replacement Cost coverage.
If you’re a first-time homebuyer, you might be overwhelmed with all the decisions required to get from writing the offer to signing at the closing table. We frequently work with first-time homebuyers and we can streamline the process for you. We work with real estate agents, mortgage loan officers, and real estate attorneys and we will coordinate directly with them once we decide on the right coverage option with you. We’ll make home insurance the easiest part of the purchasing process.
Renters Insurance, Condo Insurance, Mobilehome Insurance & Landlords Insurance
We also offer insurance for apartments, condominiums, mobilehomes, and rental properties. Please visit our Other Insurance page for more information on these and other types of insurance we provide.