How Home Insurance Works Today you are going to learn everything about home insurance policy. Even if you already have one this will teach you how and why you need home insurance policy today. This is very important, home insurance policy, for all home owners. It is not appropriate for houses being rented to others or an investment property. Six parts composed your homeowner’s insurance policy basics. This is called the coverage or the dwelling amount is where it all begins. It should be the replacement or the rebuild cost which is synonymous to the dwelling amount. If your house burns to the ground or gets hit by lightning, how much can do you need to rebuild it again? Other structures are the next part. Is barn part of your other structures? Is garage part of your other structures? Is shed part of your other structures? Do you have a swimming pool? These buildings are part of ‘other structures’. For other structures, the default is always 10% of the coverage. Your other structures will automatically get $40,000 for free if you have a dwelling with the value of $400,000. If you need more you can buy it and if you don’t there’s no credit for taking it off.
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The next important thing on this list is what is known as personal property. The amount is typically 50% of the original dwelling amount. Your ‘stuff’ might be a vague term but it is what is included in this next part. This is everything that if you were to move you would take with you. All of the stuff which includes your rugs, drapes, clothes, all your electronic devices. Typically it’s 50% but some companies offer up to 70% of no extra charge.
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The next important thing here is the loss of use. If your house is made unusable or uninhabitable while it is being fixed it is considered the loss of use. It is 20% typically of the coverage amount. So in this case it is $80,000. This amount $80,000 will be available for you to use to live elsewhere so that you can send your laundry out, eat your meals out, and stay in a hotel if you need to. The next coverage is liability coverage. You can use this amount if you get sued. If your dog bites a neighbor or if you’re cutting down a tree with your chainsaw for the first time and it lands on your neighbor’s car are some examples. This is for that type of things where you’re negligent and someone sues you. More commonly today, $500,000, or even a million are what most people choose although your limit is at $300,000 are common. Medical payment for up as high as $5,000 is used for a guest who comes on your premises or maybe heard on your premises. This is considered as a ‘goodwill’ coverage. This in a nutshell how homeowner’s insurance policy works.

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