Insurance

Coverage D, Loss of use:

Covers costs of losses when dwelling is unable to be occupied. This can be due to either damage or partial damage to the home, evacuation due to a natural disaster, inability to occupy home due to prevention by authorities, etc. Owners will be reimbursed for additional living expenses due to dislocation. Additionally, if the property is rented to others, the owner will be reimbursed for loss of rental income up to fair market value.

Coverage E, Personal liability:

Covers costs up to liability limit for defense costs, accidental damages and other related costs resulting from damage to property or injury to a third-party. Incidents occurring both at and away from the residence can be covered. Coverage excludes auto accidents.  Accidental damages and injuries caused by members of the policyholder’s family are covered.  The typical HO-E coverage limit is $100,000.

Additional coverage can be added by either increasing coverage through an endorsement or adding a personal liability (umbrella) policy. An umbrella policy provides additional liability coverage to supplement homeowners and auto insurance policies. These policies are relatively low-cost and are recommended to wealthier individuals who bear much higher liability risks.

Coverage F, Medical payments:

Covers medical expenses for third-parties injured both on the premises (with permission) and off the premises. Injuries on the premises are covered regardless of fault or negligence. Injuries off of the premises are covered if they are due to the actions of a member of the owner’s family.

Typical coverage limit with a basic policy is only $1,000. As with auto insurance, limits on this coverage are typically low because most individuals have their own individual or group medical insurance policies that cover most of the these costs.

Homeowners policies provide six main types of coverage, labeled A-F. Other minor coverages are often written into the policy. Coverages are typically based on dwelling coverage. For example, coverage B (detached structures) is limited at 10% of dwelling coverage. If a dwelling coverage is $200,000, then detached structures are covered for $20,000 (10% of $200,000). HO3 is the most common type of homeowners policy, therefore we will use HO3 coverage limits as examples.

• Homeowners Coverage A: Dwelling, attached structures.
• Homeowners Coverage B: Other structures, separated structures.
• Homeowners Coverage C: Unscheduled personal property.
• Homeowners Coverage D: Loss of use.
• Homeowners Coverage E: Personal liability.
• Homeowners Coverage F: Medical payments.

There are multiple risk exposures in home ownership. Not only is the potential loss or damage of the residence a factor, but there exists the possibility of damage to detached structures, theft of personal property, injury to third parties, liabilities, etc. An adequate homeowners policy can provide protection against these risks.

Homeowners policies provide coverage for the policyholder’s property and third-party coverage for liabilities and medical expenses. Policies can come as named peril policies (covered perils are listed) or open peril policies (all perils are covered except those that are listed). The vast majority of homeowners policies mirror the template developed by the Insurance Service Office. The uniformity in policies offered by insurers can make choosing a policy even more difficult.