Property Coverages

The first major component of a homeowners policy covers the house, sometimes referred to as the dwelling, and other structures, including things such as a detached garage, tool shed, fences and patios. In addition, the property coverage provides protection for loss of personal property, which includes furniture, appliances and clothing, among other things.

The house or dwelling is typically covered for basic perils, including damage caused by fire, lightning, windstorm, hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism, theft and volcanic eruption. This is not an exhaustive list, as most damage caused to the home would be covered. However, there are some important exclusions. For example, earthquake, flood, including sump pump and sewer drain overflow, war and nuclear events are all typically excluded. In some cases, like earthquake and sump/sewer overflow, you can buy additional coverage endorsements to add the coverage to your homeowners policy. In the case of flood insurance, you can purchase separate coverage from your insurer or agent that is backed by the National Flood Insurance Program.

There is another important element of the property coverage called loss of use. If there is a property loss, such as a fire, and the homeowner can’t live in the home temporarily, the loss of use coverage would pay for additional living expenses, (i.e., the cost of a hotel room).

“Did You Know?”

Your homeowners policy is intended to cover sudden events that cause damage to the property, rather than maintenance issues, such as wear and tear or faulty construction.

Liability Coverages

This component of homeowners insurance is made up of two parts. The first part, personal liability coverage, pays for financial loss and the expense of defending the homeowner from lawsuits involving a claim for bodily injury or damage to property of others. This risk exposure can include many things, but perhaps a couple of examples will help understand the types of losses that can occur. A child could be visiting one of your children and be bitten by the family dog. This would be an example of a potential bodily injury claim. You may be mowing the lawn or using your snow blower and accidentally launch a rock or some other debris through your neighbor’s picture window. The damage to your neighbor’s home would be an example of damage to the property of others that you may be held responsible for.

The second part of the liability coverage is medical payments to others. This coverage pays for necessary doctor and hospital costs if the homeowner causes any injury to another person. This payment is made regardless of whether the homeowner is at fault. The purpose of this coverage is to provide prompt payment of the medical expenses in hope that it will prevent a lawsuit. In our dog bite example, if your insurance company promptly agreed to pay the visiting child’s doctor and hospital bills, they may be less likely to file a lawsuit against you.