Dwelling Insurance Basics
WHAT DOES A DWELLING POLICY COVER?
A dwelling policy is a basic insurance policy intended to cover the structure, additional structures, some liability and some optional personal property.
Damage to the home caused by most disasters is covered. BUT THERE ARE EXCEPTIONS: FLOOD, EARTHQUAKE, and POOR MAINTENANCE ARE NOT COVERED in most dwelling and homeowners policy. (The property does not need to be in a flood zone to be affected by a flood. Without special flood insurance, you are not protected.)
Policies will vary among insurance companies. Variations range from what causes are covered to different amounts for loss of use and personal liability. Taking a personal inventory of your needs and considering all of your exposures to loss will help to determine what coverages you may need.
WHAT IS COVERED IN A BASIC DWELLING POLICY?
Remember, all policies will vary depending on the insurance company providing the coverage. But the coverages below are typical of most standard policies. You must read your own policy to know what is covered and what is excluded.
COVERAGE A- DWELLING
Covers damage to the home. The amount of coverage should be enough to rebuild the home in the event of a total loss.
Be sure to ask your agent about the difference between actual cash value and replacement cost. Most policies for the dwelling replacement are at replacement cost, but the time of loss is not the time you want to find out.
Often policies will include and extended replacement cost endorsement which will raise the limit of the dwelling percentage to cover additional costs due to unexpected industry or economic changes.
Additionally, many policies will also include endorsements to protect you against an increase in cost due to ordinance or law changes.
COVERAGE B- OTHER STRUCTURES
Not all structures that exist on your property are actually attached to the house. Therefore, Coverage B offers insurance protection for other structures such as a detached garage, gazebo, or storage shed.
COVERAGE C- PERSONAL PROPERTY
Often an optional coverage, your personal property such as appliances can be covered. If you lease the home with furniture, the value of the furniture would be included here.
IMPORTANT NOTE #1: Replacement cost of your contents is not always included in policies. This means that if the home burns to the ground, your insurance company will pay you the depreciated value of your 10 year old living room furniture set as opposed to just replacing your living room furniture set. This coverage only cost a few extra dollars, but well worth it at the time of loss.
IMPORTANT NOTE #2: Check with your agent about all peril coverage for your personal property. Often policies are written to only cover your personal property if it is damage, lost or destroyed by certain causes. Depending on the carrier, it only cost a few dollars more each year to add this protection.
COVERAGE D- LOSS OF USE
Essentially, this coverage pays for your financial loss if the property becomes unusable. Lost rental income while repairs are being made will be covered under this part of the policy. Available limits vary among different carriers.
COVERAGE E- PERSONAL LIABILITY
Provides coverage for bodily injury or property damage for which you are legally responsible.
COVERAGE F- MEDICAL PAYMENTS
Pays all reasonable and necessary medical expenses for a period of three years from the date of an accident to a person or persons injured while on your property. This coverage does not apply to the insured or regular residents of the insured’s household.