Homeowners insurance provides financial and liability protection for your house and belongings. In addition, it covers damages done to others through your negligence.

There is a range of homeowners policies available, with coverage spanning actual cash value to replacement cost policies. When reviewing any policy it is essential that you thoroughly understand all coverages, limits, and deductibles associated with it.

Homeowners Insurance Basics

Homeowners insurance provides coverage to repair or replace property and belongings that has been damaged by fire, wind or snow damage as well as to protect you against lawsuits if someone gets hurt on your property. Most standard homeowners policies cover damage from these events but may exclude floods or earthquakes.

Your policy comes equipped with both a declarations page and policy jacket; both documents provide crucial details such as coverage limits, deductibles and endorsements that help ensure you fully comprehend it. Be sure to read both for the best understanding. You may also obtain optional ordinance or law endorsements which cover rebuilding your home to meet current building codes or local laws that weren’t in effect when originally constructed.

Dwelling Coverage

Dwelling coverage (also referred to as Coverage A) protects the physical structure of your home from covered perils, and typically represents the most expensive aspect of any homeowner policy.

Flood insurance does not protect against flooding, earthquakes and sewer backups – should these be frequent occurrences in your area, additional policies should be purchased to cover their effects.

Your dwelling insurance requirements depend on the estimated costs associated with rebuilding in your region, so review your coverage limits annually or after making home improvements, especially after undertaking renovations. If your policy offers replacement cost coverage, an insurer will replace damaged belongings without depreciation.

Other Structures Coverage

Other structures coverage extends your homeowner’s policy to protect outdoor fixtures and buildings that aren’t attached directly to your house – like your shed, fences, landscaping walls, fountains, solar panels, decks and patios.

Most insurers include other structures coverage as part of your standard home policy at no additional cost, usually written as open perils coverage to provide protection from similar types of events to that which would apply to your dwelling.

However, these policies typically don’t cover flooding or earthquake damage. If you need extra coverage in these instances, talk with your agent about purchasing an additional policy to cover these events.

Personal Property Coverage

Personal property coverage, in addition to dwelling and other structures coverage, is often included with homeowners insurance policies. This coverage pays to replace or repair lost or stolen items such as furniture, electronics and clothing after an incident occurs and also protects you if anyone visits or stays on your property and becomes injured; most policies also offer liability coverage in case someone visits while visiting and medical payments coverage (with certain restrictions applying).

Personal property coverage doesn’t cover items owned by roommates, friends and family who temporarily live with you; additional coverage can be purchased using scheduled personal property endorsements or floater policies. Furthermore, please be aware that your coverage limit is determined based on actual cash value instead of replacement cost.

Loss of Use Coverage

Homeowners insurance loss of use coverage — commonly referred to as Additional Living Expenses (ALE) coverage or Coverage D – provides financial security against unplanned living expenses such as hotel stays and restaurant meals that arise when your house becomes inhabitable due to covered perils.

Loss of use coverage is included as standard with most homeowner and renter policies, but some insurers limit it to 20% of dwelling coverage. To qualify, hotel stays and meals incurred while your home is being repaired from a disaster covered by your policy must be paid for while being repaired; loss of use won’t apply in this instance if evacuation due to an exclusionary disaster such as fire occurs – for instance a hurricane might.

Additional Living Expenses Coverage

After an emergency has rendered your home uninhabitable, the costs associated with finding and maintaining another residence can quickly add up. Many insurance policies contain an additional living expense (ALE) coverage provision to assist in covering such expenses.

ALE provides coverage for extra or increased expenses such as housing, meals, warehouse storage fees and transportation expenses that allow policyholders to maintain an acceptable quality of living while their homes remain uninhabitable. Each insurance provider varies in their limits and details regarding ALE coverage.

Maintaining detailed records and documentation of expenses are the keys to successfully making an ALE claim, speeding up the review process of insurance companies and expediting their review process. Our Houston insurance claim lawyers are here to advise on documentation requirements as well as other important considerations pertaining to this coverage.

Exclusions

Homeowners policies usually do not cover losses caused by certain events or hazards on your property. Furthermore, coverage may also be excluded for specific activities performed there.

Other structures coverage protects permanent, separate buildings such as garages, sheds or fences that aren’t attached to your house – for instance if part of your fence collapses under heavy snowload, it will be covered (minus your deductible).

Floods, earthquakes, normal wear and tear damage, mold growth/wet rot issues, nuclear hazards or government intervention typically fall outside the coverage of standard homeowner policies; however you can often purchase additional protection for these risks from licensed insurance professionals. Contact them to get more information.

Deductibles

Deductibles are an integral component of home insurance policies, helping keep premiums down by spreading out responsibility among many small claims and keeping premiums more reasonable.

Homeowner policies typically offer two deductible options – standard and percentage-based – when covering disasters separate from dwelling limit coverage, such as earthquakes and floods.

Selecting an affordable deductible for your policy depends on your personal finances. Be sure to select a deductible you can comfortably cover out-of-pocket in case of a claim; higher deductibles can help lower premiums but ensure sufficient funds are set aside should any losses occur.