We all know that home insurance helps pay to repair or rebuild your home, but a standard home insurance policy is made up of six different coverages, some of which have little to do with your home itself. These coverages follow the first part of the alphabet, with the coverages named Coverage A through Coverage F.
Coverage A (Dwelling Coverage): Coverage A protects your home itself. Your policy states which perils (another name for risks) are covered by the policy and which perils are excluded. Typically, coverage is provided as replacement cost coverage, which means the covered claims are covered without any adjustment for depreciation. The one exception to this is often the roof, which may receive pro-rated coverage if damaged due to a covered peril. Roofs don’t last forever, so it’s common for insurers to cover the remaining use you have left in the roof.
Coverage B (Other Structures): Many homes have sheds, gazebos, fences, or other structures on the property that aren’t connected to the main house. These structures are covered under Coverage B, which is often set at a percentage of the coverage provided in Coverage A.
Coverage C (Personal Property): All the belongings in your home that aren’t attached to your home are called personal property and are covered under Coverage C. It’s common for Coverage C to provide replacement cost coverage for most types of personal property, which means there may be a deduction for depreciation in a covered claim. Jewelry and some other types of valuables may be exempt from depreciation deductions, but if you have valuables, be sure to discuss your coverage with your agent to be sure the coverage amounts are sufficient.
Coverage D (Additional Living Expense): If the event of a claim, you may not be able to stay in your home while it’s being repaired. Most home insurance policies provide an allowance to help cover the extra costs of temporary lodging, eating out, or other expenses related to being displaced.
Coverage E (Personal Liability Coverage): If someone else is injured and you are found liable, your home insurance policy can help. Notably, injuries to others due to vehicle accidents are not covered by your personal liability coverage nor are injuries resulting from business activity. However, your home insurance policy can cover your liability risk even when away from home. Your insurance company may even cover the cost of your legal defense if needed.
Coverage F (Medical Expense): Where personal liability coverage may be set at $100,000, $300,000, or even a higher amount, medical expense coverage is a separate coverage with a lower limit, typically $1,000 or $5,000. What makes this coverage unique is that there is no requirement of legal liability, making medical expense coverage the perfect solution for smaller injuries that can happen.
Many of the coverages on your home insurance policy are adjustable, and that’s a good thing. Your needs may change over time and you can adjust your coverage accordingly. It’s important to make the changes before you have a claim, however. If you haven’t reviewed your policy with your agent recently, now is the perfect time to schedule a policy review.