Policy Basics

Chapter Overview: The Basics of Understanding Your Homeowner’s Insurance Policy

Understanding your Homeowners Insurance policy is crucial for ensuring you have the right coverage and know what to expect in case of a loss. This chapter covers the quick basics to get you started, including:

Declarations Page

What It Is:

  • The declarations page (often the first page) is a summary of your insurance coverage. It includes key information such as policy number, period, address, premium and coverage limits.

What to Look For:

  • Verify that all details, like your name, address, and coverage amounts, are accurate.

  • Check the effective dates to ensure your policy is active.

Types of Coverage

1. Dwelling Coverage (Coverage A):

  • This covers the structure of your home, including attached structures like garages.

  • Look for the coverage limit—it should be enough to rebuild your home at current construction costs.

2. Other Structures (Coverage B):

  • This covers detached structures like sheds, fences, and guest houses.

  • Typically, this is a percentage of your dwelling coverage, often 10%.

3. Personal Property (Coverage C):

  • This covers your personal belongings (furniture, electronics, clothing).

  • Note the coverage amount and whether it’s replacement cost or Actual Cash Value (ACV).

4. Loss of Use (Coverage D):

  • Covers additional living expenses if you need to live elsewhere while your home is being repaired.

  • Check the limit and any time restrictions.

5. Personal Liability (Coverage E):

  • Protects you if you are sued for bodily injury or property damage to others.

  • Look at the liability limit—common limits are $100,000 to $500,000.

6. Medical Payments to Others (Coverage F):

  • Pays for medical expenses if someone is injured on your property, regardless of fault.

  • This is typically a smaller amount, often $1,000 to $5,000.

Learn More

We will dive into each one of these area with their own articles that provide examples, outline industry terminology and more, but first…let’s enjoy a fairy tale…