Homeowners Insurance

Dwelling Coverage

Dwelling coverage (sometimes called Coverage A) is the portion of your home insurance policy that pertains to the cost of rebuilding and repairing your home if it is damaged or destroyed in a covered peril such as wind, hail, lightning, or fire.

Standard homeowners insurance does not cover damage from floods or earthquakes. If needed, separate policies for protection from these losses will be required.

The amount of dwelling coverage that you purchase should equal the cost of rebuilding your home in the event of a complete loss. Do not confuse this amount with the market value of your home. The market value includes the value of your land. In the event of a disaster, you won’t lose your land, only the buildings that stand on it. The rebuilding cost, on the other hand, must account for local construction and materials costs.

The amount of dwelling coverage you have also is important because it determines your limits for other types of coverage. The limit for your personal property coverage, for example, is factored as a percentage of your total dwelling coverage. Because of this, it is important that you determine your dwelling protection first.

Other Structures Coverage

Other Structures Coverage (Coverage B) is the portion of your home insurance policy that covers the cost of rebuilding or repairing structures on your property other than your home if they’re damaged because of a covered peril such as fire, wind, or hail. This includes detached garages, sheds, and other detached buildings on your property – even fences – that may become damaged by a named peril.

A standard home insurance policy will normally provide 10% of the total dwelling coverage as protection for additional structures. For example, if you have $100,000 worth of coverage for the structure of your home, your policy will include $10,000 of coverage for other structures.

If you have more than one detached building on your property or an updated garage, you may need additional coverage above and beyond the standard 10%. Talk to a home insurance agent about scheduling an endorsement, which could raise your policy limits for your Other Structures protection.

Personal Property Coverage

Personal Property Coverage is also known as Contents Coverage or Coverage C. It is the portion of your home insurance policy that covers the cost of replacing your possessions, or home’s contents if they are destroyed in a covered peril (wind, fire, hail, lightning, etc.).

Calculating your Personal Property coverage needs

Personal property coverage limit for a standard home insurance policy is typically set at 50%-70% of the amount of dwelling coverage in your policy. In other words, if your dwelling coverage limit is set at $200,000, your personal property coverage limit will be $100,000-$140,000.

That sounds like a lot. However, depending on the value of the personal belongings in your home, you might decide that you need more. The best way to know how much contents coverage you need is to perform a home inventory. A home inventory is a list of all your personal possessions with photos, receipts, and any other proof of ownership you may have.

A home inventory serves two important functions. First, it allows you to calculate the value of your possessions to ensure you are purchasing an adequate amount of contents coverage. Second, it will be your greatest asset in the event of a disaster when you need to prove to your home insurance company that you owned that 4K UHD Smart TV and $3,000 leather couch, for example.

Additional Personal Property coverage options

Every policy will have limits as to how much it will pay for each type of property. For example, most standard home insurance policies will only pay $1,500 for jewelry lost in theft. Often, a customer will have one particular item that is expensive and needs more coverage than what is included in his or her policy.

At this point it is recommended that you schedule an endorsement on your policy for that item. For example, a policyholder with a necklace worth $10,000 would schedule an endorsement to the policy to cover it. If you think you may need additional coverage, talk to a home insurance agent about scheduling an endorsement on your policy.

Loss of Use

Loss of Use (or Coverage D) is the portion of a standard home insurance policy that protects you if your home is destroyed or damaged by a covered peril and you must seek other living arrangements while repairs are made. Loss of use coverage can help reimburse you for hotel, restaurant, and other living expenses you may incur during a specified period due to your home being uninhabitable. The purpose of this coverage is to help you maintain your standard of living in the event of a disaster.

Most standard home insurance policies will provide Loss of Use protection up to 20% of your dwelling coverage limit. This means that if you have $100,000 worth of dwelling coverage, your loss of use coverage would be approximately $20,000. Your NEU home insurance professional will provide information and expert guidance on specific additional coverage needs and options.

It’s important to remember to file a claim and get approval from a carrier before you start to use this coverage. You should also ask whether any time limits apply.

Personal Liability Insurance

Another type of liability coverage is Personal Injury Liability (also known as an Umbrella Liability Policy) which protects the insured against lawsuits involving libel, slander, and defamation of character, false arrest, detention, imprisonment or malicious prosecution, invasion of privacy and wrongful eviction or wrongful entry. This policy can also cover liability protection for auto accidents with the minimum underlying auto limits. (Be sure to talk to your Northeast Underwriters agent.)

Lawsuit coverage limitations

While you or covered household members can get protection from lawsuits alleging that you’ve caused injuries to others, lawsuits involving the transmission of a communicable disease typically are excluded by providers. Also excluded are lawsuits with allegations of mental/physical/sexual abuse and anything involving the sale, manufacture, or distribution of a controlled substance.

Medical Payments Coverage (MedPay)

Medical Payments Coverage, often called MedPay (or Coverage F) is the section of a standard home insurance policy that can cover medical costs if someone is injured on your property and does not sue you. When someone sustains an injury on your property and does not file a lawsuit, you can use MedPay to help pay for his or her treatment.

MedPay, for example, would cover these non-lawsuit injuries:

• A neighbor falls on your steps, hurts her back and does not want to sue.
• A neighborhood child falls on your driveway, sprains his ankle and his family doesn’t take you to court.
• Your dog bites your friend, but that friend will not take legal action against you.

In a standard home insurance policy, MedPay typically can pay $1,000 per injured person. Some homeowners may choose to extend this coverage to a greater amount if they feel they need extra protection. Medical payments coverage is one of the only parts of a standard home insurance policy in which the limit is not determined as a percentage of your dwelling coverage. You have the choice of purchasing more MedPay, therefore, based on your perceived risk.

Medical Payments coverage limitations

Some injuries may be excluded from coverage under standard policies. Examples of such cases are those which are:

• Due to the transmission of a communicable disease.
• Because of physical/mental/sexual abuse.
• The result of the sale, manufacture, or distribution of a controlled substance.

Medical payments coverage typically goes hand-in-hand with your personal liability protection because they both handle personal injury to guests and visitors.