Homeowner insurance is probably the least appreciated or thought about policy in your home.  You buy it when you buy your home, the premium is paid through your mortgage and when you get the renewal you just look at it and then wonder if you should file it or throw it away.

Here are the basics of what your homeowners insurance policy covers and how you can determine if you’re covered correctly or if you’re paying for something you don’t want..

If you came home and found your house burnt to the ground here’s how your insurance company would determine how to pay your claim.

Dwelling Coverage – This is the limit for your physical home.  This is what most people think about when they think of their home insurance.  The policy limit should be the cost to completely rebuild the home and anything permanently attached to it if it were a total loss.  Most policies do NOT guarantee to replace your home so you need to make sure it’s insured adequately.

Other Structures Coverage – This is for other structures at the property address which are separate from your home (Ex. shed, detached garage, pool house, etc.). Basic policies include coverage equal to 10% of the dwelling protection limit at no cost.  You can increase this amount if necessary.

Personal Property Coverage – This is your “stuff.” The second thing everyone thinks about in their home insurance.  Pick your house up, turn it over and shake it. Everything that falls out is your personal property. Included coverage varies for each company from 50% to 80% of the dwelling limit and can be increased if you have a lot of “stuff.”

There are special (reduced) limits for items like jewelry, firearms, art, money and some other items.  If you own more than $1500 of any of these you should call your agent and find out how much coverage your policy actually offers.  Often people buy these things and forget to tell the insurance agent.

Additional Living Expenses – This coverage pays the reasonable additional expenses you incur while your home is uninhabitable. If you have a claim and you can’t live in your home this will pay your rent and other expenses while your house is being rebuilt or repaired.

Deductible – Most people know what this is but just in case, it’s the amount you have to pay out of pocket before the insurance company pays on covered claims.

There are two other coverage’s included in your homeowner policy that protect you for lesser known claims. They don’t cover your stuff from direct damage.  These protect your assets.

Guest Medical Protection – Pays for guests medical expenses when a guest is accidentally injured on your premises or in your care and control regardless of fault.  If I was visiting your home and accidentally broke my arm your policy could pay my medical bills. And, it would pay regardless of fault simply because the accident happened on your property.

Family Liability Protection – This will pay for claims against you for bodily injury and property damage lawsuits.  If endorsed properly it will also include personal injury lawsuits (liable, slander and wrongful entry).  It pays for your attorney to defend you too and the actual damage awarded.

That’s it.  These are the basics in your typical homeowner policy.  Not too difficult I hope.

However, as with all simple things, the devil is in the details. While this may seem to encompass a wide variety of “things” there are many limitations and exclusions in your policy to be aware of.  Also, there are many requirements by you before and in the event of a claim.  I’ll go into many of these fun items in future posts.

Now that you have the basics I have to warn you to only use it as a guide. Every company has its unique features and exclusions. There are also dozens of extras that can be added to customize and fill in gaps.  If you have any questions, call your agent. The last thing you want to find out is you could have been covered.

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2008 Copyright All rights reserved by Candace Robinson, Arizona Real Estate Agent specializing in Maricopa County Homes and Condos for Sale