Structural Safeguards: Unveiling the Essentials of Homeowner's Insurance

I’m continuing my series on homeowner’s insurance this week highlighting Dwelling and Personal Property Coverages.

Dwelling

Dwelling coverage, also known as "dwelling insurance," constitutes the segment of your homeowner's insurance policy designed to assist in covering the costs associated with rebuilding or repairing the physical structure of your home in the event of damage caused by a covered hazard.

Most lenders will mandate that you maintain sufficient dwelling insurance to account for 100% of the replacement cost of your house. This requirement aims to safeguard both you and your lender against potential financial losses. The calculation typically considers factors such as the home's square footage, type, building costs, and occasionally the purchase price.

It is advisable to confirm with your insurance provider, but generally, structures on your property that are not physically connected to your home and do not qualify as part of the dwelling—such as detached garages, fences, or sheds—are likely not covered by dwelling insurance.

Personal Property

Personal Property insurance, sometimes called contents coverage or contents insurance, is the part of your policy that safeguards your belongings.

Personal property insurance covers the belongings in your home including furniture, clothing, appliances, and the like. If your belongings are damaged or stolen as the result of a covered peril, then the insurance company will pay to repair or replace those items up to the limit outlined in your policy for this coverage. There is usually a deductible included, which is the amount you pay for the loss before the insurance company will pay.

Valuable items, like jewelry, firearms, cameras, and laptops, may only have a small amount of coverage under your homeowners policy. For instance, you may only have up to $1,500 in jewelry coverage for loss by theft. There are other specific items that may have special limits of coverage as well. If you want additional coverage for such items, you’ll need to buy additional protection called scheduled personal property coverage.

It’s important to review your policy carefully to know what’s covered and not covered as well as any limitations there might be on coverages and claims.