The primary purpose of homeowners insurance is to pay for the repair or rebuilding of your home after a loss, but did you know there are several other things your policy may cover? The two most commonly purchased policies – the HO-3 and HO-5 – contain a wide range of standard coverage to help minimize your financial losses. With one of these policies, you generally only need to decide on a deductible, endorsements, and exactly how much home insurance is enough to meet your needs.
Coverage A – Dwelling
Dwelling coverage helps cover the cost of repairing or rebuilding your home if it is damaged or destroyed by a covered event. On both the HO-3 and HO-5 insurance policies, Dwelling coverage pays for damages from all types of risks except for the ones clearly stated in writing. This important coverage is required to meet the terms of most mortgage agreements, but it is just as important for homeowners who wish to protect the investment they have in their properties.
Without sufficient coverage, you risk having too little money to rebuild your home. You also risk having too little coverage to pay for partial losses due to the ‘Co-Insurance Rule.’ Under this rule, insurers can penalize coverage for small claims in proportion to the amount you have underinsured your Dwelling coverage. Here at Vanyo Insurance, our goal is to help you accurately assess your structural coverage needs. We use a Home Cost Estimator to calculate the local cost of cleaning up debris and rebuilding your house with similar materials and finishes.
Coverage B – Other Structures
Your home is probably not the only independent structure on your property. You likely also have a fence and driveway, or perhaps a detached garage or tool shed. Insurers typically include coverage for other structures on your property by default – usually with coverage equal to approximately 10 percent of your Dwelling limits.
Coverage C – Personal Belongings
Your personal belongings include the contents of your home and any possessions you keep off property, such as items you keep with you inside your car or when you travel. Home insurance reimburses you for damage, loss, and theft of personal belongings, but HO-3 and HO-5 policies differ in the types of events that are covered. An HO-3 policy is a ‘named peril’ policy that only provides coverage for damages and loss caused by specific types of events named in the policy. An HO-5 is an ‘open peril’ policy that covers damages and loss from all types of risks except for those specifically excluded by the policy.
When you file a claim for damaged or destroyed possessions, you will need to declare your losses. If you only have a few things stolen from your vehicle, this may not be difficult. If, however, you lose your entire home and all of its contents in a fire, a home inventory could prove helpful in assessing the extent of your loss. We recommend taking inventory of everything you own and either storing it digitally, such as in a mobile app, or otherwise storing a physical copy somewhere other than your home.
Coverage D – Loss of Use
Coverage D is the part of your home insurance that pays for the extra cost of living when you cannot live in your home due to a covered event. If your home is uninhabitable, you cannot do your laundry or cook meals in your kitchen. You may also need to find temporary housing, such as a hotel or an apartment. Fortunately, home insurance covers Loss of Use – usually up to 20 percent of your Dwelling limits.