4 Key Home Insurance Coverages


Homeowner’s insurance is an important part of your asset protection plan. It has many moving parts that you need to be aware of to ensure you are properly protected. For today, we are just going to focus on 4 key coverage limits within the homeowner’s insurance policy. They are: Your Dwelling, Your Contents, Your Liability to Others and Your Additional Living Expenses.

Your dwelling limit, if your policy is a replacement cost policy, is calculated with the current construction details of your home and is designed to cover the cost to build back after a total loss. The limit, without additional endorsements, is the maximum amount insurance will pay to build back your home. This limit is available to you whether you have a partial loss or a total loss. 

Your contents limit is designed to replace your personal property, not attached to the structure, such as your clothes, furniture, tv’s and more. You’ve probably seen recommendations on keeping a home inventory. Having an on-hand home inventory helps you see what was lost and needs to be replaced. It can be hard to remember everything once you are in the stress of a claim situation.

Your liability to others is the bodily injury or personal property damage your insurance company would pay to a third party should you or the residents of your household be determined legally responsible. You need to consider your total assets when determining your liability limit. The higher your assets, the higher your liability limit needs to be.

Your additional living expenses cover any necessary expense incurred while your home is out of use due to a covered claim. Think of an event like a tornado. You might require an apartment while you rebuild.  You might have days where there is no power and you are having to eat out. You might even need to take clothes to a laundromat. Additional living expenses covers all of these extra expenses you have had because your home was out of use.

Your contents and additional living expenses are a percentage of your dwelling limit. Many people don’t realize that by trying to reduce and save money by cutting their dwelling limit, they are also cutting other important coverages as well. Contents and additional living expenses can usually be increased if more coverage is needed.

If you are concerned with your policy limits, then please give our agents a call. We are happy to offer a second opinion, answer your questions or provide a quote!

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