Towne Insurance | Seven Coverage Parts of Homeowners Insurance (2024)

Generally, a homeowners insurance policy includes at least six different coverage parts. The names of the parts may vary by insurance company, but they typically are referred to as Dwelling, Other Structures, Personal Property, Loss of Use, Personal Liability and Medical Payments coverages. They are usually presented as policy sections and are often labeled Coverages A through F.

Coverage Parts A, B, and C protect property.

Coverage A:Dwelling

The homeowner policy's first coverage section protects your house and any attached structures, such as garages, decks, or fences. The typical policy covers your home when it is damaged by many perils (also known as causes of loss) including fires or storms. However, the following causes of loss are usually excluded from coverage under the homeowners policy:

  • Earthquake
  • Flood
  • Faulty maintenance
  • Damage from insects or vermin
  • Wear and tear, gradual damage, or deterioration

Coverage B:Other Structures

This coverage section protects structures that are not attached to the home, such as a detached (separate) garage, storage or utility shed, playground equipment, and swimming pools.

Coverage C:Personal Property

This covers your possessions, whether they are at your home or away with you on vacation. Personal property is often covered on a named peril basis. This means that only the causes of loss listed in the policy section are covered. The coverage is also subject to limitations and exclusions. Types of property having significant value, such as jewelry, fine arts, collectibles, etc., may require special protection. Talk to your agent about scheduling (adding) coverage on a floater which broadens and extends coverage for high-valued possessions.

Actual Cash Value vs. Replacement Cost

Commonly, protection under sections A and B is provided on either an actual cash value or a replacement cost basis. Actual cash value is defined as replacement cost minus depreciation. Replacement cost is the actual cost to replace the structure, regardless of depreciation. Check your policy to see which type of coverage you have. Coverage under section C is usually provided on an actual cash basis. However, your agent may be able to add replacement cost to your possessions just like that found in Coverage A.

Coverage D:Loss of Use

This coverage handles the cost of additional living expenses while your home is being repaired. The coverage also applies if the home is unusable. However, the loss or loss of access has to be the result of an event that is covered by the policy. For instance, if your home was damaged during a war and you had to abandon it, Coverage D would not be available because war is excluded. Additional expenses normally include food, housing, and transportation. However, the expenses must exceed what your family normally incurs.

Coverage Parts E and Faddress coverage for injuries to persons or damage to property that belongs to others.

Coverage E:Personal Liability

This Coverage Part responds if you are legally responsible for causing property damage or physical injury. Protection includes paying for your defense costs and any financial judgment for covered incidents. Naturally the coverage would not apply for excluded situations, such as intentional injuries. Example: Joe is sued by a guy he injured after tackling and repeatedly punching him during a pickup basketball game. The injuries from this incident are not accidental and would not be covered.

Coverage F: Medical Payments

This Part provides rapid reimbursem*nt for minor injuries, such as a guest who trips and falls while visiting your home. This coverage does not apply to a family member. For example, if your child and your neighbor's child are both injured while playing and need to go to the emergency room, this coverage will pay for your neighbor's expenses but not for your own child.

This is a brief overview of homeowners insurance. All of the coverage provided by the homeowners policy is subject to limitations such as exclusions, policy limits, and deductibles. It's important that you discuss the details of coverage and any other insurance questions with your insurance agent.

Towne Insurance | Seven Coverage Parts of Homeowners Insurance (2024)


How many parts are on a homeowner's insurance policy? ›

The names of the parts may vary by insurance company, but they typically are referred to as Dwelling, Other Structures, Personal Property, Loss of Use, Personal Liability and Medical Payments coverages. They are usually presented as policy sections and are often labeled Coverages A through F.

What is the liability portion of a homeowners insurance policy meant to cover responses? ›

Liability covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by your pets.

What is the standard coverage for homeowners insurance? ›

Standard homeowners policies provide coverage for disasters such as damage due to fire, lightning, hail and explosions. Those who live in areas where there is risk of flood or earthquake will need coverage for those disasters, as well.

What is the most complete homeowners insurance policy coverage called? ›

Called a comprehensive policy, an HO-5 policy offers the highest level of insurance coverage for houses and belongings. It covers your house and belongings under all circ*mstances except those listed as exclusions in the policy. The exclusions for HO-5 policies are the same as those under an HO-3.

What is the most important part of homeowners insurance? ›

The most important part of homeowners insurance is the level of coverage. Avoid paying for more than you need.

What is a coverage part? ›

Coverage Part means the section of the coverage agreement setting forth the terms, definitions, conditions, and limitations of indemnification for the risk described. Coverage part may also refer to an extension of coverage or additional coverage within a coverage part.

What is not covered in a homeowners policy? ›

Termites and insect damage, bird or rodent damage, rust, rot, mold, and general wear and tear are not covered. Damage caused by smog or smoke from industrial or agricultural operations is also not covered. If something is poorly made or has a hidden defect, this is generally excluded and won't be covered.

Which area is not protected by most homeowners insurance? ›

These are the areas that are not protected by most home insurance.
  • Flooding. ...
  • Earthquakes. ...
  • Business equipment. ...
  • Jewelry or artwork. ...
  • Power outages. ...
  • Nuclear hazard. ...
  • War. ...
  • Dog bites. Most homeowner insurance covers medical bills and legal fees caused by dog bites.

What part of a property policy shows the amount of insurance? ›

Declaration Page

The part of your insurance policy that shows the policy period, who and what is insured, the basic amounts, and general types of coverage being provided. The declaration page also lists all the documents or policy forms, endorsem*nts, and riders which make up the insurance policy.

What is the 80% rule in homeowners insurance? ›

When it comes to insuring your home, the 80% rule is an important guideline to keep in mind. This rule suggests you should insure your home for at least 80% of its total replacement cost to avoid penalties for being underinsured.

What is the most common basic homeowners insurance policy? ›

HO-3. The most common type of homeowners insurance is the HO-3 policy, which covers your home, your personal property, liability, additional living expenses and medical payments.

Which of the following losses would not be covered by a homeowners policy? ›

Protecting that investment from fire and other perils is extremely important. Please note, homeowners insurance policies do not provide protection against losses from floods, earthquakes, mudslides, mudflows or landslides. You can learn more about what homeowners policies cover in this guide.

What home repairs do most insurance cover? ›

Home warranty plans, sometimes referred to as home repair insurance, typically cover:
  • Appliances.
  • Electrical systems.
  • Plumbing.
  • Air conditioning.
  • Furnaces.

Who is the most expensive homeowners insurance? ›

Travelers is the most expensive homeowners insurance company for $200,000, $350,000, $500,000 and $750,000 dwelling coverage amounts. Rates vary significantly among companies because they each have their own formulas for pricing.

What company has the best homeowners insurance? ›

The best home insurance companies in June 2024
Insurance CompanyBest forAverage annual premium*
USAABest overall$1,452
AllstateBest overall$1,959
LemonadeBest for digital experienceN/A
ChubbBest for high-value home coverage$3,521
6 more rows
3 days ago

How many components are there in an insurance policy? ›

Three components of any insurance type are the premium, policy limit, and deductible.

How many parts are there in a typical insurance application? ›

There are basically three sections in a typical life insurance application: Part I - General. Part II - Medical. Part III - Agent's Report.

What are the three basic parts of full coverage insurance? ›

Full coverage car insurance is protection that includes collision, comprehensive, and liability coverage. Often, you can supplement your insurance with uninsured motorist coverage, personal injury protection, medical payments, gap insurance, and other coverage options.

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