Your Homeowners Coverages, Explained

Dwelling

Dwelling coverage pays to repair or rebuild the structure of your home after a covered loss. That includes the roof, walls, floors, built-in systems like plumbing and wiring, and structures attached to the house, such as an attached garage or deck.

A covered loss is damage from a cause your policy includes, such as fire, wind or a burst pipe. Your dwelling limit should be based on what it would cost to rebuild at today’s construction prices, which can be very different from what the home would sell for.

Worth knowing

• Extended replacement cost. Some policies add a cushion above your dwelling limit if rebuild costs come in higher than expected.
• Building code upgrades. Rebuilding to current code can cost more, and coverage for those upgrades is often limited unless you add it. See building ordinance or law.
• Roof settlements. Some policies pay older roofs at actual cash value (replacement cost minus wear and tear).

Building ordinance or law

When a damaged home is rebuilt, local building codes may require it to be brought up to current standards, or require undamaged parts to be torn down. Those extra costs can be significant, and standard policies often cover them only in a limited way, or not at all.

Building ordinance or law coverage, usually added as an endorsement (an add-on to your policy), helps pay those code-related costs after a covered loss.

What it typically helps with

• Undamaged portions. Helps cover the value of parts of your home that were not damaged but must be torn down because of code requirements.
• Demolition and debris removal. Helps pay to demolish and clear those undamaged portions.
• Increased cost of construction. Helps pay the extra cost of rebuilding to meet current codes, such as updated electrical, energy or seismic standards.
• Limits. This coverage is often set as a percentage of your dwelling limit. Older homes may need a higher amount, since they are more likely to fall short of current code.

Other structures

Other structures coverage applies to buildings and structures on your property that are not attached to the house, such as a detached garage, shed, fence or gazebo.

The limit is often set as a percentage of your dwelling limit, commonly around 10%.

Worth knowing

• Large outbuildings. A shop or detached garage may need a higher limit than the default.
• Business use. Structures used for a business are often excluded or limited.

Personal property

Personal property coverage helps replace your belongings, like furniture, clothing, electronics and tools, after a covered loss. It typically protects your things both at home and when you travel.

How a claim is paid matters: replacement cost pays what it costs to buy new, while actual cash value subtracts wear and tear.

Worth knowing

• Special limits. Jewelry, cash, firearms, collectibles and similar items often have low limits unless they are scheduled (listed individually on your policy).
• A home inventory. A quick video or photo walkthrough of your home can make a claim much easier.

Loss of use

If a covered loss makes your home unlivable, loss of use coverage helps pay the extra costs of living somewhere else while it is repaired, such as a rental, hotel, or higher food costs.

If you rent out part of your home, it may also help replace lost rental income.

Worth knowing

• Time and dollar limits. Some policies limit how long or how much they will pay, and major rebuilds can take longer than expected.

Personal liability

Personal liability helps pay if you accidentally injure someone or damage their property, including legal defense costs if you are sued. It typically covers you, the named insured, and in most policies the family members who live with you.

It is not just for accidents at home. It typically follows you when you are out and about, for example if you accidentally knock someone over on a walk or while riding a regular bicycle.

Worth knowing

• Situations that need their own insurance. Personal liability typically does not cover accidents at work or in a car, boat or other self-propelled vehicle. Many electric bikes are considered self-propelled, so ask before you assume an e-bike is covered.
• Business activities. Liability from running a business is typically excluded.
• Intentional acts. Damage or injury caused on purpose is not covered.
• Higher limits. If a serious claim could exceed your limit, an umbrella policy adds another layer of protection.

Medical payments to others

Medical payments coverage helps pay smaller medical bills for guests who are hurt at your home, regardless of who was at fault. It is designed to handle minor injuries quickly, often without a lawsuit.

Worth knowing

• Not for your household. It does not pay medical bills for you or the people who live with you.
• Lower limits. Limits are usually small, often a few thousand dollars per person.

What a standard policy usually leaves out

Earthquake, flood and sewer backup are typically excluded or need separate coverage. Learn about earthquake insurance or go back to Home Insurance.