Homeowners insurance protects you against disasters. Your policy covers your house, and the things inside. It covers damage to your property. It also covers your liability for any injuries or property damage caused to other people.

Types of Homeowner’s Insurance Coverage

A standard policy covers four things:

1. The structure of your home
2. Your personal belongings
3. Liability protection
4. Living costs if you can’t live in your home because of a fire

Some Things Are Not Covered by Insurance

Damage caused by most disasters is covered. This includes fire, smoke, lightning, wind, hail, frozen plumbing, theft, the weight of ice and snow, and a few others. But there are exceptions. Damage caused by floods, earthquakes, or poor upkeep is NOT covered. You must buy new policies for floods and earthquakes.

Different Policies for Different Situations

Structures vary widely, so a different policy is usually needed for each type. A condo policy often covers inner structures like wallboard and lighting. But outside walls may not be covered.  A home insurance policy often covers sheds and detached garages. Renter’s insurance often covers only liability and personal belongings.

Liability Protection

This helps protect you from injury that you cause to other people. It often covers injuries whether they happen on or away from your property. If you are accused of causing injury, your insurance coverage can cover legal fees and damages.  Failure to insure could put you assets at risk.

Living Costs

This pays the cost of living away from home if there is a fire, storm or other disaster. It covers things like hotel bills and meals.

Actual Cash Value or Replacement Cost?

These are different ways to determine the value of your belongings. Many of your things will fall in value over time. So it’s key to consider this when you purchase coverage for your personal property.

Actual Cash Value

This covers your property for the amount you might get if you sold it at fair market value. Many of your things will fall in value over time. Actual Cash Value coverage often costs less than Replacement Cost coverage.

Replacement Cost

Covers your property for the amount it costs to buy them new.  This often costs more than Actual Cash Value.

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