When you purchase a home, you take on a wide range of responsibilities. One of the responsibilities you have to take on is carrying homeowner's insurance. It is important to understand how homeowner's insurance works to choose the best coverage and access your coverage benefits when necessary.
1. Dwelling Coverage is For Your Home
When you look at your policy, you will note the term "dwelling coverage." Your dwelling is your home, and this coverage applies specifically to the physical structure of your home. Most policies will protect your home against damage caused by things such as hail, lightning, wind, fire, and theft.
When you look at your dwelling coverage, you will want to make sure that your coverage limit is high enough that, if your home were destroyed, you would be able to rebuild your home again from the ground up.
It is important to keep in mind that if you live in an area where either flooding or earthquake are common, you will need to get a separate type of coverage for each type of incident.
2. Other Structure Coverage is a Subset of Your Dwelling Coverage
Other structure coverages are for all physical structures on your property that are not directly attached to your home. This includes things such as a detached garage or shed, as well as any fences on your property.
Generally, your other structures are only covered up to a set amount of your dwelling coverage. The exact coverage can vary, but ten percent is the general coverage limit for other structures. For example, if you have $100,000 in dwelling coverage, you would have $10,000 or 10% coverage for other structures.
3. Personal Property Is Protected
Your personal property is also covered with your home insurance policy. This includes all the items inside of your home. Like dwelling coverage, your coverage limit for your personal property is generally connected to your dwelling coverage limit.
Your property coverage limit is somewhere between fifty to seventy percent of your dwelling coverage limit on most policies. So, if your dwelling coverage limit is $100,000, your property limit would be between $50,000 - $70,000, depending on your policy.
It is important to note that there are often limits for high-value items, and high-value items often need to have a special endorsement.
4. Liability Protection is Included
Finally, another important element of your home insurance coverage is your liability protection. Liability protection is designed to protect you if someone sues you because they get injured or suffer property damage while on your property. Your liability protection will cover a lawyer, and the settlement, up to your policy limit.
When it comes to protecting your home, it is important to understand the type of coverage your homeowner's insurance policy provides you with. Your dwelling, other structures, and personal property are all protected. Additionally, you have personal liability protection under your policy as well. These are just some of the protections afforded to you with your homeowner's insurance policy.