What does home insurance cover?
Homeowners Insurance is a property insurance policy that covers losses, damages and liabilities caused by various perils. These perils are called "named perils", in the insurance industry, and include fire, theft and winds. The insurance covers medical expenses, lost wages, and other expenses in the event that you are sued over injuries on your property.
What is included in a house insurance policy?
A homeowners' policy will typically include a number of different coverages to protect your home, personal property and other structures. You should also have liability insurance to pay for court costs, if you're sued for damaging someone else’s property or injuring another person while on your property.
HO-3 Policies are Open-Peril Homeowners Insurance
Two types of homeowner insurance are available: comprehensive (HO-55) and modified form. 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.
They can be purchased on either a replacement cost or actual cash value basis. Your insurance company will pay for the materials to be used in a rebuilding your home at replacement cost if it is done from scratch. 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
Standard homeowners policies cover damages to your property. This is important, especially if there are children playing on your lawn and a pet bites you. This coverage is usually accompanied by a personal liability limit that will protect you against claims for injuries or other damages that occur on your property.
Insurance for Loss or Use
Loss of Use claims can be used to pay for temporary living expenses such as hotel bills or other temporary living costs that you may incur while your home undergoes repairs or reconstruction. This coverage can vary from policy to policy, but is typically between 20 and 50 percent of the total insurance.
Personal Property Insurance
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
This part of your policy protects you against lawsuits that may arise from an injury or damage to your property. This portion of your home insurance pays for medical expenses, lost wages, and other expenses incurred as a result injuries or damages to another person on your property.
ALE Endorsement
This endorsement may pay to repair or restore your home so that it meets the new building code or ordinance that was in place at the time of construction. This endorsement may cost a little more, but the peace of mind is worth it.