What does Home Insurance Cover?
Homeowners insurance is a type of property insurance that covers loss, damage and liability caused by a variety of perils (called "named perils" in the insurance world), including fire, theft and windstorms. Homeowners insurance pays medical bills, wages lost and other expenses when you are sued because of injuries that happen on your property.
What is covered by house insurance?
A homeowners insurance policy includes coverage for your home, other structures, and personal possessions. It should also include liability insurance that pays for any court costs if you are sued for damage to someone else's property or injury to another person on your property.
Homeowners policies with HO-3 coverage are available for open-peril risks.
There are two types of homeowner's insurance: comprehensive (HO-05) and modified form (HO-8). The first type of insurance covers damage caused by any peril. The second only covers certain perils. Both options offer some protection against theft, fire and other hazards. However, the latter is more expensive but can prevent large losses, especially if you own expensive items like jewelry or furs.
Many home insurers provide HO-3 policy options.
The cost can be calculated on a replacement value or a cash value basis. If you decide to rebuild your house from scratch, your insurer will cover the cost of materials of similar quality. This can get expensive if you want to add new rooms or even insulation. A policy with an actual cash value, however, only covers the current market value of your home, less any depreciation.
Liability Coverage
A standard homeowners policy will cover damage that occurs on your premises. This is important, especially if there are children playing on your lawn and a pet bites you. This coverage comes with a personal limit of liability that protects you from claims for injuries and other damages on your property.
Insurance Coverage for Loss in Use
The loss of use coverage will pay for any temporary living expenses, such as hotel costs and food bills that you might incur while your house is being repaired or rebuilt. This coverage can vary from policy to policy, but is typically between 20 and 50 percent of the total insurance.
Personal Property Coverage
Most homeowners policies will replace your furniture, electronics and other personal possessions, if damaged in a covered loss. Some homeowners' insurance policies cover high-value items, such as jewelry and art.
Liability Coverage
The liability section of your home policy is intended to protect you from lawsuits brought against you for injuries or damages that happen on your property. This part of your policy pays for medical bills, lost income and other expenses as a consequence of injuries or damage caused to someone on your property.
ALE Endorsement
This endorsement will pay for the restoration or repair of your home in order to meet new building codes and ordinances which were in effect when it was built. The cost can be small, but is worth the peace.