The family insurance portfolio usually always includes some form of property insurance. The homeowner policy has been around a long time and is purchased every time a family purchases a new home. Homeowner's insurance is very comprehensive coverage but is very often misunderstood. The typical homeowner always has some kind of maintenance problem. These kinds of problems are sometimes submitted as claims on their homeowner's insurance. That is where the misunderstanding begins. Homeowner's policies protect you against losses caused by perils. Maintenance and deterioration problems are never covered by your home policy. Your homeowner's policy would become unaffordable if that were the case.

Perils Insured Against – Fire or lightning, windstorm or hail, explosion, riot and civil commotion, aircraft, smoke, vandalism, theft, falling objects, the weight of ice sleet and snow, accidental discharge of water or steam, freezing, volcanic eruption, and more. These are the basic perils covered by most home policies.

Homeowner Policy Structure

Section A – The Dwelling – This provides coverage for the dwelling and any structures attached to that dwelling.

Section B – Other Structures – This provides coverage for detached structures like garages, storage sheds, flag poles, fences, and swimming pools.

Section C – Personal Property – Personal property provides coverage for personal property owned by the insured anywhere in the world. There are limitations on certain types of personal property

Section D – Loss of Use – This coverage refers to the additional living expense that the insured incurs when the dwelling becomes uninhabitable because of a peril covered in the policy.

The perils and the policy structure are the essentials that you need to study when purchasing a homeowners policy. Replacement cost verses actual cash value is the next consideration. These are the two methods that insurance companies use to settle claims. The actual cash value method will rebuild your dwelling or replace your property by taking the replacement value and subtracting the depreciation. Replacement Cost will replace your dwelling or personal property with material of like kind and quality without depreciation.

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