If you take a careful look at
your homeowners policy, you should find at least six different coverage
sections. The names of the coverages may vary by insurance company, but they
typically are referred to as Dwelling, Other Structures, Personal Property,
Loss of Use, Personal Liability and Medical Payments coverages. These coverages
are usually presented as sections of the policy and are often labeled Coverages
A through F.
The homeowner policy's first coverage section protects your
house and any attached structures, such as garages, decks, or fences. The
typical policy covers your home when it is damaged by most common hazards (also
referred to as perils or causes of loss) including fires or storms but not
flood or earthquake.
This coverage section protects structures that are not
attached to the home, such as a detached garage, storage or utility shed, and playground
equipment.
Coverage under sections A and B is
usually granted on either an actual cash value or a replacement cost basis.
Actual cash value is defined as replacement cost minus depreciation.
Replacement cost is the actual cost to replace the structure, regardless of
depreciation. Check your policy to see which type of coverage you have.
This covers your possessions, whether they are at your home
or away with you on vacation. Personal property is often covered on a named
peril basis. This means that only the sources of loss that appear in the policy
are eligible for coverage. The coverage is also subject to limitations and
exclusions. Types of property having significant value, such as jewelry, fine
arts, firearms, coins, collectibles, etc., may require special protection. Talk
to your agent about scheduling (adding) coverage on a floater which broadens
and extends coverage for higher value possessions. Extra coverage may also be
necessary for electronic and/or business property.
Coverage under section C is
usually provided on an actual cash basis. However, your agent may be able to
add coverage on the replacement cost basis that is available under Coverage A, to
your possessions.
Sub-Limits are
specific, maximum amounts of coverage that apply to certain "classes"
of personal property which are either highly susceptible to loss or damage
and/or are higher valued than most other items found in the home. Sub-limits
commonly apply to money, securities, personal records, tickets, stamps, and
precious metals (including plated or solid silver or gold ware). Sub-limits are
also in the form of limited theft coverage for certain situations.
This provides reimbursement for the cost of additional
living expenses while your home is being repaired due to a covered cause of
loss. Additional expenses normally include food, housing, and transportation.
However, the expenses must exceed what your family normally incurs. Limited,
but important, coverage also exists for loss of income due to the
unavailability of residence space that is rented out to others.
This section provides coverage if you are found legally
liable for causing property damage or physical injury. Protection includes
paying for your defense costs and any resulting judgment for covered incidents.
Check with your agent for specific coverages since certain incidents are
excluded from coverage.
This coverage provides immediate, rapid reimbursement for
small injuries to guests in your home. This coverage does not apply to resident
members of the family. For example, if your child and your neighbor's child are
both slightly injured while playing and need to go to the emergency room, this coverage
will pay for your neighbor's expenses but not for those of your own child.
There are many exclusions in the homeowners policy that will
significantly modify the coverages described above. Read them carefully as you
evaluate your coverage.
Consult your policy for
definitions conditions and limitations. The terms of this brochure do not
represent contract terms. The policy is subject to company underwriting
practices.