What Should Homeowners Insurance Include/Cover?

Nov 7, 2020 | Personal Insurance

Home Insurance By Definition

Homeowners insurance in Denver, CO as well as other States, helps to provide protection and repair for your home and your belongings against damage or theft. Virtually all mortgage companies require borrowers to have insurance coverage for the full or fair value of a property (usually the purchase price) and won’t make a loan or finance a residential real estate transaction without proof of it. Homeowners’ insurance policies generally cover destruction and damage to a residence’s interior and exterior, the loss or theft of possessions, and personal liability for harm to others. 

You don’t even have to own your home to have insurance. Some landlords require their tenants to maintain renter’s insurance coverage but whether it’s required or not, it is a lifesaver to have this kind of protection. Like in owner’s insurance coverage it is an insurance policy that provides some benefits and covers unexpected events. A typical renter’s insurance policy includes three types of coverage that help protect you, your belongings, and your living arrangements after a covered loss. Renters insurance also covers your personal property, liability, and additional living expenses. Personal property covers the cost to repair or replace your belongings, such as clothing, furniture, and electronics up to the limits of your policy. Liability helps to repair if you accidentally buy someone else’s property or a guest’s medical bills if you are found responsible. While additional living expenses cover additional costs you incur, like hotel bills, if the residence you rent is damaged or uninhabitable. This coverage typically doesn’t cover personal property loss over your coverage limit, liability protection over your coverage limit, and damage to the structure of the building you’re renting.

Homeowners insurance generally helps cover:

  • Your dwelling
  • Other structures on your property
  • Liability for injuries and damage to someone’s property
  • Personal property

You may also be able to purchase other additional coverage such as damages caused by fires, lightning strikes, windstorms, and hail.  But, it’s important to know that not all-natural disasters are covered by homeowner’s insurance. For example, damage caused by earthquakes and floods is not typically covered by homeowners’ insurance. You may be able to purchase separate insurance policies to help protect your home and belongings against those types of risks. 

Optional home insurance coverage:

  • Flood insurance protects your house and belongings from flood-related damages. It is a separate policy with its own deductible. If you live in a state or area that is prone to flooding, this coverage is a good idea and may even be required depending on your location.
  • Earthquake insurance covers your home in the event of damages caused by an earthquake. This policy also has its own deductible.
  • Replacement cost plus is an extra level of protection that can provide additional coverage to rebuild your home after a total loss. If you have owned your property for an extended time period and are concerned about depreciation, taking out additional replacement cost coverage may be a good idea.
  • Water backup of sewer protects your home in the event of a sewer or drain backup, which is an unfortunate but common issue faced by homeowners.

Dwelling Insurance Coverage 

Dwelling coverage sometimes called “dwelling insurance” is the part of your home owner’s insurance policy that may help pay for the rebuilding or the repair of the physical structure of your home if it’s damaged by a covered hazard or by natural disaster.

There are certain hazards, or perils, that are covered by most standard homeowners’ insurance policies. While the coverage can vary from state to state or from one geographical region to another, homeowners policies typically help cover damage from the following events:

  • Fire
  • Lightning Strikes
  • Windstorms
  • Hail
  • Explosion
  • Vandalism
  • Theft

It doesn’t include floods, earthquakes, sewer backups, or damage that occurs from a lack of maintenance. You may be able to buy additional coverage or a separate insurance policy to help cover some of these additional perils. For example, you may be able to add water backup coverage to your existing homeowner’s insurance policy to help cover sewer backups. Or, you may be able to buy flood insurance to help protect your home against flooding. Talk to your insurance agent to find out what options are available to you.

Other Structure Coverage

Your policy also includes coverage for structures that aren’t attached to your home. This section of your policy, known as other structure coverage, or Coverage B, is included in every standard home insurance policy and covers everything from your detached garage to the protective fence around your property. Homeowners’ policy coverage covers structures on the residence premises separated from the dwelling by a clear space or connected to the dwelling by a fence, utility line, or related connection. Examples include a detached garage, tool shed, driveway, swimming pool, gazebo, or fence. The limit of insurance for all other structures combined is 10 percent of the dwelling limit.

Like other coverage in your policy, other structures’ coverage has its limitations. However, you may be able to add a business or rental property endorsement to your policy to make sure you’re properly insured.

Other structure coverage can help cover detached structures on your property such as:

  • Detached garages
  • Fences
  • Swimming pools
  • Guesthouses
  • Gazebos

If other structures on your property get damaged, this insurance coverage can help pay your cost to repair or replace them. If you have more than one detached building on your property or updated garage, you may need additional coverage above and beyond the standard 10%. Talk to a home insurance agent about scheduling an endorsement, which could raise your policy limits for other structures’ protection.

Liability Coverage

One of the most important components of homeowners, condos, or renters insurance policy is the liability section. This coverage protects against accidents you are liable for that occur inside or outside your home and result in bodily injury or property damage. Liability covers you against lawsuits for bodily injury or property damage that you or your family members cause to other people. The assets your home liability insurance is designed to protect includes everything from your liquid assets, such as your checking and savings accounts, your investments and retirement accounts, your valuable personal property, your home, and any other properties such as a vacation home. 

No matter how careful you are, accidents can occur. Liability coverage may help you to pay for costs resulting from an injury to someone else or damage to their property if you are found liable. For instance, liability protection may help cover:

  • A guest’s medical bills
  • Your legal expenses if sued
  • An injured party’s lost wages
  • Cost of repairing the damage you accidentally caused to someone else’s property

You may be able to increase your liability coverage limits by adding a personal umbrella policy. Your agent can explain what options are available to you. Personal Umbrella Policy is another type of insurance designed to add extra liability coverage over and above another insurance policy, it covers not just policyholders but also other members of the family or household. It is a single policy that covers most aspects of your financial life, so any time you run over liability limits on one of your other insurance policies, your umbrella policy is there to take care of the extra costs.

Personal Property Coverage

Personal Property Coverage or insurance protects your home’s contents or personal belongings inside your home like furniture, appliances, and other personal possessions from damage or theft. Whether you live in a home, apartment, or condo, personal property coverage is one of the most important aspects of your insurance. It is convenient if you somehow know something about accurate replacement costs so you will be able to know how much or what can help you in time of loss. The good thing about this coverage is that your belongings are also protected outside of the home as well. It also helps you to refund the value of your belongings or pay to replace your items after a covered loss. 

Examples of belongings that Personal Property Coverage may include: 

  • Furniture
  • Electronics
  • Clothing
  • Artworks

There are two basic personal property coverages, these are the actual cash value and the Replacement cost coverage. Actual cash value is the one who replaces your items based on what they’re worth now. This could be less than what it would cost to replace them, while the Replacement cost coverage pays to purchase a new, similar item if your property is damaged or destroyed.

Many insurers offer optional coverage that may further help protect the stuff you own. For instance, you may be able to purchase extended coverage for items such as jewels, watches, and furs that have values above your personal property coverage limits. Extended coverage or scheduled personal property can help provide more protection for some of your most valuable belongings such as jewels, antiques, musical instruments, and expensive gadgets.

How much does it cost?

The costs of homeowners insurance depend on several factors, including the coverage you select, features of your home, and the value of your personal belongings.  There may also be extra costs for additional coverage or increased coverage limits. An agent can help you choose the coverage that fits your needs.

Like in dwelling insurance coverage, you don’t want to choose the purchase price or current market value. This should be the amount that it’d take to rebuild your home known as “reconstruction costs”. Most experts will say you should choose a limit between 50% – 75% of your dwelling coverage amount. There is also an Extra coverage option on your insurer that also provides additional charges depending on the value of the items such as expensive jewels and fine arts collections for more coverage.

In liability insurance coverage, the majority of homeowner policies come with $100,000 in personal liability insurance but this is rarely enough coverage. If a serious fall or injury were to happen in your home, medical expenses, to say nothing of the cost of a lawsuit, would quickly eat up this amount of protection. Most experts recommend upping your limits to at least $300,000.  The medical payments portion has its own limits as well.  The amount of medical payment coverage you can purchase varies by the insurer but at least $5,000 is recommended.

 While in personal property coverage there are two “value” types you can put on your possessions: actual cash value and replacement cost value. The actual cash value (ACV) pays you what your items are worth today including depreciation. Let’s say you purchased a $3,000 couch 5 years ago. With depreciation, today it’s worth $2,300. With an actual cash value plan, the insurance company would pay you out how much that couch is worth today (so the $2,300).

The replacement cost value (RCV) is the exact amount it would cost to replace the lost item. Typically this is the same number as what you bought it for. So you would get paid $3,000 for a comparable couch to the one you purchased 5 years ago.

Since you’re paid out more in the case of the claim, replacement cost value usually has a slightly higher premium cost than actual cash value. 

And other structures’ coverage is typically up to 10% of the dwelling portion of your homeowner’s insurance policy. However, you can opt for less. If you have $200,000 in dwelling coverage, you can get up to $20,000 in other structures coverage.


Be sure to carefully review your home or renters policy so that you have a clear understanding of what is and isn’t covered by homeowner’s insurance. If you somehow don’t have any of the following insurances for your home, contact a nationwide agent. Choose the liability limit that’s right for you and start getting the coverage you need for you to be a much safer and secure household and belongings.

Talk To Us!

Already have home insurance but with the life changes that happened to your life in the past couple of months, you feel you may need to re-evaluate your coverage? Then it’s time to have your policy reviewed! Call us on our toll-free number at +1(720) 221-8168 today and make sure you still have the most dependable insurance policy at the most affordable rates.

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