5 Things That Are Covered By a Basic Homeowner's Insurance Policy

When you purchase homeowner's insurance, it is important to understand what is covered by your insurance. Your homeowner's insurance policy will cover your home, other structures on your property, your personal property, personal liability, and additional living expenses, depending on the plan you get.  

#1 Your Home 

The first thing that your homeowner's insurance policy covers is your home. Your home or dwelling, as it will more than likely be called on your actual insurance policy, is your actual house and anything attached to it. For example, your garage would be considered part of your home, as would the chimney that extends from your home. 

You can have the actual value of your home covered, which is what your home would fetch if it was sold on the open market today. Or you can have the replacement value of your home covered, which is the cost to replace your home if it were to be completely destroyed.  

Which coverage is best depends on a lot of circumstances. If the market is really depressed, and the selling price of your home is less than the cost to replace your home, it makes sense to have replacement value coverage. If the market was doing really well, and the actual value of your home was greater than the cost to replace it, it would make sense to have that type of coverage. 

#2 Other Structures 

Your homeowner's policy is designed to cover other physical structures on your property other than your home. For example, the shed in your backyard, that nice fence you installed around your property, and your driveway would all be considered other structures that your insurance should cover. 

#3 Personal Property 

Your homeowner's insurance covers your personal property. This includes everything from the pots and pans in your kitchen to the couch in your living room to your cell phone and your clothing. You do need to check and see if there are any limits on valuable items; some insurance policies will only cover things like jewelry, artwork, and electronics up to a set sub-limit of your overall personal property limit. If the value of your items exceeds the limit, you'll need to purchase additional coverage for those items.  

#4 Personal Liability 

When you own a home, you are responsible for what happens to other people on your property due to unintentional situations. So, if someone who is not covered under your policy trips on your uneven sidewalk and breaks their leg, your insurance will cover you from a financial viewpoint. 

#5 Living Expenses 

If anything were to happen to your home, and you couldn't live there, your insurance will help pay for a temporary place to stay. They should also cover basic living expenses for you while your home is getting fixed. 

Your homeowners insurance coverage is designed to cover damage to your home, other structures on your property, personal property, personal liability, and living expenses. You need to make sure your policy provides you with enough coverage in these five key areas.