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Here is a general overview of a homeowner's (HO3) policy

A standard homeowner’s insurance policy (HO3) typically includes four types of coverage. They include:

  1. Coverage for the structure of your home.
  2. Coverage for your personal belongings.
  3. Liability protection.
  4. Loss of Use or Additional living expenses in the event you are temporarily unable to live in your home because of a fire or other insured disaster.

1. THE STRUCTURE OF YOUR HOUSE

This part of your policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disaster listed in your policy. It will not pay for damage caused by a flood or routine wear and tear. When purchasing coverage for the structure of your home, it is important to buy enough to rebuild your home.

Most standard policies also cover structures that are detached from your home such as a garage, tool shed or gazebo. Generally, these structures are covered for about 10% of the amount of insurance you have on the structure of your home. If you need more coverage, talk to your insurance agent about purchasing more insurance.



2. YOUR PERSONAL BELONGINGS

Your furniture, clothes, sports equipment and other personal items are covered if they are stolen or destroyed by fire, hurricane or other insured disaster. Most companies provide coverage for 50% to 70% of the amount of insurance you have on the structure of your home. So if you have $100,000 worth of insurance on the structure of your home, you would have between $50,000 to $70,000 worth of coverage for your belongings. The best way to determine if this is enough coverage is to conduct a home inventory. For a free online inventory please visit www.knowyourstuff.org.

Expensive items like jewelry, furs and silverware are covered, but there are usually dollar limits if they are stolen. Generally, you are covered for between $1,000 to $2,000 for all of your jewelry and furs. To insure these items to their full value, purchase a special personal property endorsement or floater and insure the item for its appraised value. Coverage includes "accidental disappearance," meaning coverage if you simply lose that item. And there is no deductible.



3. LIABILITY PROTECTION

Liability covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. The liability portion of your policy pays for both the cost of defending you in court and any court awards—up to the limit of your policy. You are also covered not just in your home, but anywhere in the world.

Liability limits are generally $100,000 or $300,000. However, some people feel more comfortable with even more coverage. You can purchase an umbrella or excess liability policy which provides broader coverage, including claims against you for libel and slander, as well as higher liability limits.

Your policy also provides no-fault medical coverage. In the event a friend or neighbor is injured in your home, he or she can simply submit medical bills to your insurance company. This way, expenses are paid without a liability claim being filed against you. You can generally get $1,000 to $5,000 worth of this coverage. It does not, however, pay the medical bills for your family or your pet.



4. ADDITIONAL LIVING EXPENSES

This pays the additional costs of living away from home if you can't live there due to damage from a fire, storm or other insured disaster. It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt. Coverage for additional living expenses differs from company to company. Many policies provide coverage for about 10 to 20% of the insurance on your house.


Source: Insurance Information Institute


Please remember that policy coverages, terms and conditions vary from company to company. Be sure to review your policy to determine what coverages, terms and conditions your policy contains.