Insurance Simplified: Understanding a Standard Home Insurance Policy: What’s Covered and How It Works

​Is your home insurance covering everything you need?
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Learn about key coverages like dwelling, liability, and how to protect valuable items.

Read more to make sure you’re properly protected.

Welcome back to our "Insurance Simplified" series! Today, we’re diving into the basics of a standard home insurance policy. We’ll break down what’s typically covered, how it works, and a few important details that can help you understand your coverage better. Let’s jump right in!

1. Dwelling Coverage (Coverage A)
Dwelling coverage is the heart of your home insurance policy. It protects the structure of your home, including the roof, and walls, from covered events like fire, theft, or vandalism.
Example:
If a fire causes damage to your kitchen, dwelling coverage will help pay for repairs or rebuild your home, depending on the severity of the damage.

2. Other Structures Coverage (Coverage B)
This covers detached structures on your property, like a garage, or shed. It’s typically based on a percentage of your dwelling coverage limit—usually around 10% of your Coverage A amount.
Example:
If a storm damages your detached garage, other structures coverage will help repair or rebuild it.
 
3. Personal Property Coverage (Coverage C)
Personal property coverage is all about protecting your belongings, like furniture, electronics, and clothing, from risks such as theft or fire. This coverage is generally based on a percentage of your dwelling coverage limit, usually 50% of Coverage A.
Example:
If your home is damaged by fire and your personal belongings are lost, personal property coverage will help replace your items, up to the limits specified in your policy. 

Important Note: Certain items, like electronics, firearms, and jewelry, may have specific limits on coverage. For example, some insurers may only cover the theft of firearms up to $2,500. If you have an extensive collection or items that exceed these limits, you may need to purchase a separate policy or endorsement to ensure they're properly covered.

4. Liability Coverage (Coverage E)
Liability coverage protects you if you're found legally responsible for injuries to others or damage to their property. This is an important part of your home insurance policy, as accidents can happen anywhere—on your property or even away from home.
Example:
If a guest trips on your front steps and sues for medical bills, liability coverage can help cover legal fees, medical expenses, and any potential settlements.

5. Medical Payments to Others (Coverage F)
This coverage helps pay for medical expenses if someone is injured on your property, regardless of fault. Unlike liability coverage, which covers legal costs if you’re sued, medical payments cover the immediate medical bills without the need for a lawsuit.
Example:
If a neighbor gets hurt while visiting and needs medical treatment, medical payments to others can help pay for their doctor bills, even if it wasn’t your fault.

6. Loss of Use Coverage (Coverage D)
If your home becomes uninhabitable due to a covered event, loss of use coverage helps pay for additional living expenses, such as hotel stays and meals. It’s crucial for situations where you need to temporarily relocate while repairs are made.
Example:
If a water leak makes your home unlivable, loss of use coverage will help cover the cost of temporary accommodations, so you don’t have to worry about finding a place to stay.

7. What Perils Are Typically Covered?
A standard home insurance policy usually covers these perils, or events that can cause damage:

• Fire and smoke damage
• Windstorms and hail
• Vandalism and theft
• Falling objects (like trees)
• Water damage from burst pipes or rain
• Explosion

Note: Keep in mind, floods and earthquakes typically aren’t covered by standard policies, but you can usually add separate coverage for those events if needed.

8. Important Coverage Details 
When looking at coverage B (Other Structures) and C (Personal Property), these are often set as a percentage of your dwelling coverage, unless you request otherwise. Typically, Coverage B is about 10% of your dwelling limit, and Coverage C is about 50%. For example, if your dwelling coverage is $200,000, may have $20,000 for other structures and $100,000 for personal property, unless you decide to adjust these amounts.

Please keep in mind many carriers have minimum limits required based on your dwelling coverage.

9. Exclusions and Add-Ons
While home insurance policies cover a lot, some exclusions may apply. Standard policies don’t usually cover damage from floods, earthquakes, or normal wear and tear. If you're concerned about these exclusions, you might want to consider adding additional coverage options like flood insurance or earthquake coverage.

Conclusion: The Basics of Home Insurance
A standard home insurance policy provides solid coverage to protect your home, belongings, and liability. Understanding the details of your policy, like how coverage amounts are calculated and what’s covered, can help you feel confident that you have the right protection.
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​                                                                    - Madalyn Sanford
Disclaimer: Coverages, limits, and exclusions are subject to the specific details of your insurance policy. Please review your own policy for specific coverage details and limits, as they may vary.