Consumer Connection: Understanding your Homeowners Policy

Sonya Sellmeyer

By Sonya Sellmeyer, Consumer Advocacy Officer for the Iowa Insurance Division

A comprehensive homeowners policy is essential to protecting your home and its contents.  A homeowners policy typically consists of at least six types of coverage, each designed to shield you from various risks and liabilities. Understanding the basic coverages can help you make informed decisions about your insurance needs.  Let’s review each type of protection: 

Coverage A -Dwelling: This is the cornerstone of your homeowners policy, protecting the physical structure of your home against perils or causes of loss such as fire, windstorms, hail, lightning, and vandalism.  Dwelling coverage ensures that if your house is damaged or destroyed, the insurance company will help cover the costs of repairs or rebuilding.  Floods, wear and tear, and earthquakes are excluded perils. 

Coverage B – Other Structures: Beyond your primary dwelling, this coverage extends to other structures on your property, such as detached garages, sheds, fences, or guest houses.  It provides financial protection if these structures are damaged or destroyed due to covered perils.

Coverage C – Personal Property: This type of coverage safeguards your belongings inside your home, including furniture, clothing, electronics, and appliances.  If they are damaged, stolen, or destroyed by covered perils, personal property coverage helps reimburse you for their value, allowing you to replace or repair them.  This coverage may be actual cash value (replacement cost less depreciation) or replacement cost which reimburses you to purchase a new item at current market value.  

Coverage D – Loss of Use: If your home becomes uninhabitable due to a covered loss, loss of use coverage helps cover additional living expenses.  This can include costs for temporary accommodation, food, and other essentials while your home is being repaired or rebuilt.

Coverage E – Personal Liability: Liability coverage protects you financially if someone is injured on your property or if you accidentally damage someone else’s property.  It covers legal expenses, medical bills, and compensation for the injured party up to the limits specified in your policy.  It would not pay for expected or intentional damage.  

Coverage F – Medical Payments: This coverage is similar to personal liability coverage but focuses specifically on covering medical expenses for guests injured on your property, regardless of fault.  It can help pay for immediate medical treatment without a lawsuit.

Additional Coverages, Endorsements, or Riders: Depending on your specific needs, you may add extra coverage through endorsements or riders to your homeowners policy. These can include coverage for high-value items such as jewelry or artwork, and protect against specific risks such as water backup and sump pump overflow. 

Coverages may be subject to the deductible, policy limits and exclusions.  It is essential to review your policy regularly, assess any changes in your circumstances, and work with your licensed insurance agent to make adjustments as needed.  By doing so, you can have peace of mind knowing that you are prepared for whatever life or Iowa weather may throw your way.

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