Homeowner insurance has a lot of different benefits and features but the actual coverage is divided into two policy sections. These sections protect you from the perils defined in the policy.
Section I
A – The Dwelling – The dwelling and attached structures
B – Other Structures – structures un-attached
C – Personal Property – contents of the dwelling
D – Loss of Use – additional living expense
The list of perils that a homeowner policy insures against are fire and lightning, windstorm or hail, explosion, riot and civil commotion, aircraft, vehicles, smoke, vandalism and malicious mischief, theft, falling objects, accidental discharge of water and steam, sudden and accidental tearing apart, freezing, and volcanic eruption.
Section II
E - Liability Coverage - Personal Liability provides coverage in the event a claim or lawsuit is brought against the insured because of bodily injury or property damage caused by an occurrence.
F – Medical Payments – medical payments provide coverage to others in the event an individual is injured on the premises and requires medical treatment.
These are the basic coverage benefits on a homeowner policy. The next step in the process is to know how much insurance you should purchase. The actual face amount is usually determined by an insurance replacement cost calculator. The calculator needs several kinds of data in order to give you a quote. It will often require the square footage of your home along with info about items that increase the value of your home like air conditioning and fireplaces. There will probably be a question about the percentage of your basement that is finished.
Homeowner insurance policies have two ways to settle a claim. It will either be settled on an actual cash value basis or a replacement cost basis. The actual cash value settlement will assess the replacement cost and subtract any depreciation because of age or use. The actual cash value policies are usually purchased on older homes. Replacement cost settlements replace the loss with like kind and quality of material without depreciation.
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