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Coverages A, B, C, D, E, And F For Home Insurance

Coverages A, B, C, D, E, And F for Home Insurance

Coverages A, B, C, D, E, And F For Home Insurance

When buying a home, one of the important decisions you have to make is what home insurance policy to purchase. Your mortgage lender will usually have specific requirements that you need to keep in mind, in addition to understanding your own coverage needs.

Standard home insurance has six types of coverage on each policy. Though some of these types of coverage have names more commonly used in the industry, companies described these six types alphabetically, as coverages A through F.

Each type of coverage plays its own role in providing comprehensive financial protection for you and your home. Understanding their distinctions and standard limitations will help you evaluate if a future or current policy is right for you and what policy changes you might need to request from your insurance company.

Coverage A – Dwelling Coverage

Coverage A, or dwelling coverage, is the central coverage included in a homeowners policy and will generally have the highest limit of types of coverage on your policy.

  • What It Covers: Dwelling coverage protects the structural components of your home from damage and covers in the event of damage to the home that impacts walls, floors, ceilings, home systems, and more.
  • When It Applies: This type of coverage will usually apply in the event of damage from theft, vandalism, fire, explosions, windstorms, and lightning.
  • Standard Coverage: Coverage A can have any limit and it is generally recommended that homeowners carry Coverage A that protects the full replacement cost of their home.
  • Add-On Coverage You Might Need: If you live in an area with higher risks of floods or earthquakes, you may need to purchase add-on coverage in the form of a rider or additional policies. These add-ons will protect your home against structural damage from these kinds of natural disasters as they are not covered under standard Coverage A.

Coverage B – Other Structures Coverage

  • What It Covers: Coverage B applies to structures independent of your home, like fencing, detached garages, swimming pools, sheds, driveways and more.
  • When It Applies: Coverage B applies under similar circumstances as does Coverage A, including damage from theft, vandalism, fire, explosions, windstorms, and lightning.
  • Standard Coverage: Standard policies will usually limit Coverage B to 10% of the replacement cost of the home, which is also the general industry’s minimum recommendation for homeowners.
  • Add-On Coverage You Might Need: Depending on your home’s circumstances, including location, you might want to request a higher limit for Coverage B. Additionally, some insurance companies will have different policies and may require you to get separate coverage for your pool.

Coverage C – Personal Property Coverage

More commonly referred to as personal property coverage, Coverage C deals with all the belongings in your home.

  • What It Covers: Personal property coverage protects the belongings found within the home that don’t fall outside the stipulations in the policy, such as items in certain categories or that are too valuable and need their own policies.
  • When It Applies: Personal property coverage applies when the inside of the home sustains damage, such as during a fire or from water damage.
  • Standard Coverage: Personal property coverage tends to range from 20% to 50% of the total replacement cost under Coverage A.
  • Add-On Coverage Available: Personal belongings in certain categories, such as artwork, firearms, and jewelry, will have specific monetary caps on how much can be paid out for claims. If you want additional coverage, you can purchase add-on valuable items coverage from many insurance companies.

Coverage D – Loss of Use Coverage

Loss of use refers to when the insured home is damaged to the point that it cannot be lived in. Loss of use coverage is also known as additional living expenses coverage.

  • What It Covers: Loss of use covers additional living expenses, including housing expenses and in-excess of normal food costs when the insured property cannot be used. It can also cover lost income from rental properties that are unlivable.
  • When It Applies: Loss of use coverage applies when a home is a total loss after damage and is unlivable, and it covers the temporary housing and additional living costs (such as food).
  • Standard Coverage: Loss of use coverage covers costs of temporary housing for the entire time that the insured property is being repaired or rebuilt.
  • Add-On Coverage Available: N/A

Coverage E – Personal Liability Coverage

  • What It Covers: Personal liability coverage protects a homeowner from financial responsibilities of paying for a property or medical bills resulting form property damage or injury from the accidents caused by the homeowner or a member of their household.
  • When It Applies: Coverage E applies in cases where the homeowner is at fault (or liable, when negligence has caused a loss due to property damage or injury. Liability coverage does not apply for things that the homeowners or household members did not cause or did deliberately.
  • Standard Coverage: Standard policies include $100,000 worth of liability coverage.
  • Add-On Coverage Available: Homeowners are advised to carry $300,000 to $500,000 worth of liability coverage, for which they would have to purchase additional liability insurance.

Coverage F – Medical Coverage

It’s important to understand that, though they both can cover medical bills due to injury, medical coverage and liability coverage can apply in overlapping scenarios but each has distinct stipulations and limitations. 

  • What It Covers: Medical coverage pays for medical bills of a person injured on the insured property.
  • When It Applies: Medical coverage applies when a person is accidentally injured and the claim is less than the maximum coverage limit.
  • Standard Coverage: Standard policies include medical coverage of between $1,000 and $10,000.
  • Add-On Coverage You Might Need: Medical coverage can range, but the amount is generally determined by what each state requires, as well as what the home insurance company whose policy you are dealing with offers.

Conclusion

Obviously, understanding each of these six types of coverage will help you evaluate your current or future policy and if it fits your needs. Make sure to ask any insurance agent or broker who is helping you find a policy about the conditions and limits of each type of coverage so you understand the potential changes and additional costs you might need to add to each policy.

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