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Homeowners Insurance: Understanding the Basics

Your home houses some of the most valuable things in your life. From cars, pets, to your loved ones, a home is truly precious. However, disaster can strike. That’s why taking a home insurance policy is key. To get it right, you need to understand the basics. Here’s is a breakdown of what’s covered under a home insurance policy.

What’s Covered?

A good home insurance policy is one that clearly spells out the perils that are covered and those that aren’t. With dwelling coverage, you’re protected by what’s called open perils. With personal property coverage, you’re protected by named perils, implying that you’re covered from the sixteen perils named in the policy.

With ISO (Standard Insurance Services Office), policy, you’re insured against perils, such as fire/lightning, vandalism, wind/hail, smoke, explosion, falling objects, aircraft, riot, theft, volcanic eruption, nuclear hazard, government action, earthquakes, flooding, power failure, the weight of snow or ice, mold, intentional loss, and much more.   

A standard home insurance policy comprises of six basic protections. And those protections include coverage for your home’s structure as well as all the other structures available on your property. And these include:

Dwelling Coverage

This type of coverage is also referred to as dwelling coverage. It provides protection against physical damage to your home’s structure.

With dwelling coverage, the foundation, floors, plumbing, exterior walls, interior walls, water heaters, as well as, cabinetry is fully protected. Remember, your home is covered at its replacement cost. So, the amount you’re paid for a loss is equal to the cost of rebuilding your home at the current prices.

Your policy might also cover detached structures like your garage, gazebo, work shed, or fence. The maximum limit of your other structures is typically 10 percent of your home insurance policy’s dwelling coverage limit.

Personal Property

Homeowners insurance also provides coverage for your personal belongings. If somebody breaks into your house, storage unit, or hotel room and steals your stuff, your insurer will cater for the replacement costs. Personal property coverage also safeguards the guest’s personal property against damage or theft.

Additional living expenses (ALEs)

A home insurance policy also caters for the cost of additional living expenses. In case your house gets destroyed or damaged by a covered peril and you need to move out while it’s repaired or rebuilt, loss-of-use coverage covers everything right from hotel bills and the property’s rental value to restaurant meals.

Personal Liability Coverage

On top of several property coverage policies, home insurance also incorporates personal liability protection in case you’re held liable for someone else’s injuries or damages to their property. This type of coverage caters for legal or medical costs up to your coverage limit.


Home insurance is essential to your home’s safety. It also offers protection to you and your loved ones. So, why not invest in such a beneficial resource? The above guide will help you understand the different types of coverages included in a standard home insurance policy.