What does homeowners insurance cover?

Homeowners insurance is intended to cover damage or destruction to your home, as well as loss of personal property. Under a home insurance policy, there are two main types of claims: first party property and third party liability.

First party property claims are claims that only involve you and your insurance company. They are covered by the homeowners policy based on how much coverage you selected when you purchased the policy. These claims can be for the house itself, known as “dwelling” coverage, or “other structures” coverage for those other buildings on your property that are not attached to the main house, such as a detached garage or storage shed. Possessions that aren’t permanently attached to the house are covered under “personal property or contents” coverage and can include everything from furniture to clothing to appliances. It’s important to know that personal property coverage protects your possessions even when they aren’t inside your house. For example, if your car is stolen and you had personal belongings in the vehicle, the car itself is covered by the auto policy, but your personal belongings are covered by your homeowners policy.

The third party liability portion of the homeowners insurance covers you for claims that are made against you and other family members who reside in your home. These may be claims that allege you injured other individuals or caused damage to their property. As with the personal property coverage, the incident that results in a personal liability claim does not need to take place on your property. Even if a liability claim does not have merit, it can still be very time consuming and costly in legal expenses. The personal liability coverage will provide for your legal defense in addition to damages if you are found to be liable.

Homeowners insurance will also provide for additional living expenses if your house is damaged by a covered claim. If you are unable to live in the house due to damage or during the period of repairs, the insurance policy will provide coverage for the expense to find alternate living arrangements.

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