Understanding the Two Main Types of Homeowners Insurance Coverage

Homeowners insurance provides two basic types of coverage that are crucial for protecting your home and financial well-being.

The first type of coverage is dwelling coverage, which pays for damages to your home's structure, including the roof, walls, and foundation. This type of coverage is typically the most expensive part of a homeowners insurance policy.

In most cases, dwelling coverage is based on the home's market value, and it's usually the largest portion of the policy. For example, if your home is worth $300,000, your dwelling coverage would likely be around $250,000.

The second type of coverage is personal property coverage, which pays for damages to your belongings, such as furniture, appliances, and clothing.

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Homeowners insurance provides a range of coverage options to protect your home and belongings. Two basic types of coverage are named-perils coverage and all-risk coverage.

Named-perils coverage only covers specific perils listed in the policy, such as wind, hail, and fire. If the peril is not listed, it is not covered. This type of coverage is often used for life insurance policies.

All-risk coverage, on the other hand, covers all losses except those specifically excluded. This type of coverage is often used for homeowners insurance policies. It covers damage to your home from any cause except those excluded, such as an earthquake or a flood.It typically covers your belongings for damage from the perils listed in your policy.

Dwelling coverage is a key part of homeowners insurance, covering the structure of your home, including walls, floors, windows, and roof. It also covers built-in appliances and attached structures like garages and porches.

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Dwelling coverage is the most basic and essential part of homeowners insurance. It covers the structure of your home, including walls, floors, windows, and roof, as well as built-in appliances like furnaces.

Most policies cover damage from any cause, except those specifically excluded, such as earthquakes or floods. Your lender will likely require at least this level of coverage if you have a mortgage.

A severe thunderstorm can cause significant damage, like uprooting a tree that falls onto your home. You'd pay your deductible and the insurer would pay the rest, up to your dwelling coverage limit.

Dwelling coverage typically includes attached structures like garages, porches, and decks. It's essential to understand what's covered and what's not to avoid any surprises during a claim.

Common causes of homeowners insurance claims include wind, hail, freezing, fire, and lightning. These events can cause significant damage to your home's structure, and dwelling coverage will help you recover.

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Medical Payments is a type of coverage that pays for medical expenses, regardless of who is at fault.

This coverage pays for injuries that occur on your property, such as if your dog bites a friend who's visiting.

Similar to liability coverage, medical payments coverage has restrictions, including no coverage for intentional acts or car accidents.

You can tap into your medical payments coverage if someone suffers a minor injury on your property, like a trip to urgent care for stitches after a dog bite.

Your medical payments insurance will cover the cost of medical expenses, but not other damages or losses.

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Loss of use coverage can be a lifesaver if your home is damaged and you need to live elsewhere temporarily.

This type of coverage pays for additional living expenses, such as hotel stays and restaurant meals, if your home is uninhabitable after a covered disaster.

Loss of use coverage applies as long as your home is undergoing repairs for a covered claim, but not if the damage is from a disaster that isn't covered, like a flood.

Your insurance company would pay for you and your family to rent a similarly sized house nearby if your home is out of commission for repairs, like after a kitchen fire spreads to your living room.

The amount you're eligible for is up to your selected limit, which you can choose when you purchase your policy.

Homeowners insurance provides two basic types of coverage: named-perils coverage and all-risk coverage. Named-perils coverage only covers losses from perils specifically listed in the policy, while all-risk coverage covers all losses except those specifically excluded.

The Insuring Agreement outlines the major promises of the insurance company and states what is covered. For instance, named-perils coverage is listed as one of the two basic forms of an insuring agreement. This means that if a peril is not listed in the policy, it's not covered.

Here's a breakdown of the two main types of homeowners insurance policies:

HO-3 insurance policies, also called "special form", are the most common type of homeowners insurance policy. They generally cover damage to your home from any cause except those the policy specifically excludes.

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Personal property coverage is a crucial part of most homeowners insurance policies. It provides protection for your personal belongings, such as clothes, furniture, and electronic devices, anywhere in the world, not just inside your house.

Coverage for personal property is usually 50 percent of the coverage for the dwelling, or an amount agreed upon by you and the insurance company. However, coverage is limited on certain types of property, such as cash, securities, jewelry, furs, manuscripts, and stamp or coin collections.

These items are especially susceptible to loss, so it's a good idea to consider scheduling them separately. You can purchase additional amounts of insurance for these items, and your agent can provide specifics on how to do so.

Personal property coverage works differently than dwelling and other structures coverage. Instead of covering your belongings for anything that isn't specifically excluded, homeowners policies often cover only disasters that are listed, such as fire, theft, vandalism, and weight of ice, snow, and sleet.

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Here are some examples of events that are typically covered under personal property coverage:

This means that if a pipe bursts in your kitchen and ruins your furniture, your personal property coverage would take care of the damage, minus your deductible.

HO-3 insurance policies are the most common type of homeowners insurance, and if you have a mortgage, your lender is likely to require at least this level of coverage. This type of policy generally covers damage to your home from any cause except those specifically excluded, such as an earthquake or a flood.

One of the key features of HO-3 insurance is that it typically covers damage to your belongings from only the perils listed in your policy. This means you'll need to review your policy carefully to understand what's covered.

HO-3 insurance is a "special form" policy, which means it provides comprehensive coverage for your home. It's a good idea to review your policy to understand what's covered and what's not.

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Here's a summary of the key features of HO-3 insurance:

Overall, HO-3 insurance provides a good balance of protection and affordability, making it a popular choice for many homeowners.