What Are the Six Categories Typically Covered by Homeowners Insurance?

Homeowners insurance provides financial protection for property owners in the event of damage or loss to their private residence and its contents. It safeguards against unforeseen events that could lead to significant financial burdens. Beyond protecting the physical dwelling, it also covers financial losses from certain accidents that occur within the home or on the insured property.

Dwelling Coverage

Dwelling coverage, often referred to as Coverage A, protects the physical structure of the home itself. This includes integral components like the foundation, exterior walls, roof, and permanently attached fixtures. Structures physically connected to the main house, such as an attached garage or a deck, are also included under this coverage.

This portion of the policy helps pay for the cost of repairing or rebuilding the house if it is damaged by a covered peril. Covered events include fire, windstorms, hail, lightning strikes, and vandalism. The coverage limit is determined by the estimated cost to rebuild the home from the ground up, rather than its market value.

Other Structures Coverage

Other structures coverage, known as Coverage B, extends protection to buildings and structures on your property not physically attached to your main dwelling. This includes detached garages, sheds, fences, gazebos, in-ground swimming pools, mailboxes, and unattached carports.

The coverage amount for other structures is a percentage of your dwelling coverage limit, ranging from 10% to 20% of the Coverage A amount. For instance, if your dwelling is insured for $300,000, your other structures coverage might be $30,000.

Personal Property Coverage

Personal property coverage, also identified as Coverage C, protects your belongings inside your home and, in many cases, even when they are temporarily away from the property. This includes furniture, clothing, electronics, and appliances. Jewelry, art, and other valuables are also covered, though they may have specific sub-limits.

When a covered loss occurs, reimbursement can be based on either actual cash value (ACV) or replacement cost value (RCV). Actual cash value accounts for depreciation due to age and wear, providing a lower payout, while replacement cost pays to replace the item with a new one of similar kind and quality without depreciation. Policies set Coverage C at a percentage of your dwelling coverage, between 50% to 70%.

Loss of Use Coverage

Loss of use coverage, often designated as Coverage D or Additional Living Expenses (ALE), provides financial assistance if your home becomes uninhabitable due to a covered event. This coverage helps with the extra costs incurred while you cannot live in your home during repairs or rebuilding.

Examples of covered additional living expenses include temporary housing such as a hotel or rental unit, increased food costs from eating out, and extra transportation or pet boarding fees. Limits for loss of use coverage are set as a percentage of your dwelling coverage, ranging from 10% to 30%.

Personal Liability Coverage

Personal liability coverage, known as Coverage E, protects you and members of your household if you are found legally responsible for bodily injury or property damage to others. This protection applies whether the incident occurs on your insured property or elsewhere. It covers legal defense costs and any settlement or judgment amounts, up to the policy limit.

This coverage applies in scenarios such as a guest slipping and falling on your property, resulting in an injury. It also extends to accidental damage you or a family member might cause to a neighbor’s property. Personal liability limits range from $100,000 to $500,000 or more, providing financial protection against lawsuits.

Medical Payments Coverage

Medical payments coverage, or Coverage F, addresses medical expenses for guests who sustain injuries on your insured property. It pays for medical bills regardless of who was at fault for the injury. This can help to prevent minor incidents from escalating into larger liability claims.

This coverage is for smaller medical bills, such as those resulting from a minor cut, a sprained ankle, or an X-ray. Limits for medical payments coverage range from $1,000 to $5,000 per person per incident. It differs from personal liability coverage because it does not require a determination of fault, focusing solely on the immediate medical needs of the injured guest.