UPDATED: Aug 25, 2015
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Aside from the basic insurance forms designating what perils are covered under a policy, homeowners insurance is further defined by its home coverage classification. This allows the insurance company to mix-and-match coverages to provide exactly the amount of protection the customer needs. Different policies may have several coverage classifications included. Here are the classifications:
Coverage A – Dwelling
This is the most obvious type of coverage. It pays for the home itself, referred to as a dwelling, and covers damage to the home’s structure. The perils protected against depend on the policy form chosen, but will usually include such things as fire, hail and vandalism. When the home is damaged, the insurance company will pay up to the value of the building, but not the land it sits on or any outlying structures.
Coverage B – Other Structures
Aside from the home itself, all other structures on the property are listed under Coverage B. These include sheds, barns, garages, car ports and fences. These structures can be insured up to 10% of the home’s total coverage. If additional protection is needed for a specific structure, a homeowner can ask their insurance company about receiving a rider.
Coverage C – Personal Property
While coverages A and B protect structures, coverage C protects the contents of a person’s home. This includes personal belongings like clothing and electronics, in addition to furniture, artwork and appliances. An insurance company will usually allocate up to 75% of the value of the structure toward covering its contents, but particularly expensive individual items need to be appraised and listed separately on the policy.
Coverage D – Loss of Use
If you become displaced from your home due to a covered peril, loss-of-use protection entitles you to reimbursement for certain living expenses while the home is repaired. For example, coverage D may pay for a hotel stay, food expenses and transportation. The exact limitations of what will be reimbursed vary on a case-by-case basis, so be sure to discuss the situation with your insurance company before utilizing this coverage.
In addition to these basic coverages, protection is available on some homeowner’s policies for liability and medical payments. This type of policy will protect you from lawsuits in the event that someone is injured while visiting your home or sustains an injury or property damage as a result of your family or pets.