What Does Home and Life Insurance Typically Cover?

Homeowners insurance typically protects your dwelling, as well as other structures like sheds and garages. It also covers personal property at a level often a percentage of the overall dwelling coverage limit.

Life insurance provides a payout to beneficiaries upon your death. There are many different types of life policies.

Liability Coverage

Liability coverage for physical harm or property damage brought on by the policyholder or other household members is typically included in home insurance plans. It generally is at a limited dollar amount and excludes certain types of negligence, such as accidents that happen away from home. If you desire added protection, you can purchase a personal umbrella policy that provides comprehensive coverage.

Many homes are insured under the Broad Form (HO-2), while others may be certified under the more comprehensive Special Form (HO-3). It is essential to review your policy to understand what your dwelling and personal property coverages are and discuss options for increasing coverage limits.

Most homeowner’s policies also cover additional living expenses if your house is uninhabitable after a covered loss. Ask your agent or producer about specific time and dollar limits on this coverage. Some insurance policies cover debris removal, repairs for property protection, and fire service fees.

Dwelling Coverage

Coverage A on a home or condo policy, often known as dwelling coverage, covers the cost of rebuilding or repairing your home, including any attached garages. Additionally, it shields the building from specific risks, including burglaries, lightning strikes, and house fires. Usually, it doesn’t protect you from earthquake or flood damage and is covered by other plans, such as life insurance.

The dwelling coverage limit is typically based on the replacement cost value of your house. To keep up with inflation, some insurers offer an Inflation Guard endorsement that automatically increases your dwelling coverage limits by a percentage each year.

Dwelling insurance also typically includes other structures on your property, such as sheds, barns, swimming pools, fences, and unattached guest houses. It may also have personal property of people who live in your home, such as furniture and electronics. Finally, it provides loss of-use coverage if the structure is so severely damaged that you can’t stay home.

Personal Property Coverage

You may rest easy knowing that your personal belongings are protected if you have renters, condos, or homeowners insurance. If, regrettably, one of the insured perils results in the theft or damage of your possessions, your insurance policy will pay for the replacement or repair of those items. This coverage is typically 50 to 70 percent of your dwelling limit. For high-value items, you may need to add an endorsement or floater for them to be fully covered.

Some insurers offer the option to replace actual cash value personal property loss settlement with replacement cost, reimbursing you for your possessions based on their current market value without depreciation. However, this is only available under some policies.

The types of property covered by personal property coverage vary among companies, but most include furniture, clothes, sports equipment, and electronics. Items that aren’t typically covered include money, silverware, and other valuables. Some insurers also sell additional coverage for specific valuables like jewelry, furs, and artwork called scheduled personal property. This type of supplemental coverage is generally limited to $500 per item.

Additional Living Expenses

Homeowners insurance typically offers additional living expenses (ALE) coverage, also known as loss of use coverage, which pays for hotel stays and restaurant meals when a covered loss makes your home temporarily uninhabitable. ALE limits are usually about 20% of your dwelling coverage limit.

ALE covers expenses above your regular costs, such as meals in restaurants if you can’t cook at your temporary home, and it typically reimburses daily so that you have more flexibility than waiting for a lump-sum payment. Storage fees, pet boarding, cleaning, and transportation costs are also typically covered.

You’ll generally need to submit receipts and other documentation for any claims, so keep track of all expenses incurred. If your ALE limit isn’t enough, consider talking to your insurer about increasing it. Alternatively, you can purchase an endorsement for extra coverage separate from your standard policy. Some companies offer this coverage, but others only offer it as an add-on or an optional coverage.