For most homeowners, home insurance is not just a luxury. It is typically necessary, and mortgage lenders will only lend on residential real estate with proof.

The typical homeowner’s policy includes four main types of coverage: dwelling, personal property, liability, and additional living expenses. Understanding the basics can help you select the proper homeowner’s insurance policy for your needs.

Property Coverage

Homeowners insurance and insurance like co-op apartments and condos protect real property and personal possessions from damage or theft. It’s typically a “package policy,” which also covers liability. Mortgage companies usually require homeowners to have it, and it’s generally a good idea for people to buy it, even if they rent their homes.

Most standard homeowner policies include coverage for your house, outbuildings like a garage or shed, and fences and walls on your property. They may also cover some landscaping, plants, and shrubs. Neglect or wear and tear-related damage is not, however, covered.

Medical costs are covered under liability coverage in most homeowners’ policies for visitors unintentionally hurt on your property. It does not usually pay for your legal fees if you are sued. However, this coverage can be enhanced by purchasing a separate endorsement for valuables like jewelry and artwork.

Liability Coverage

A home insurance policy provides protection against financial loss from events like fires, windstorms, and theft. It can also protect you from lawsuits that result from injuries incurred on your property, such as someone slipping and falling on your front step. Most policies of homeowners insurance Newark, DE, have a few different types of coverage, with a specified dollar limit for each.

The portion of a home insurance policy dedicated to property coverage pays for the expenses associated with maintaining or replacing your home and any other structures on your land, including sheds and fences. It also pays for your belongings up to a certain amount.

Liability coverage in a home insurance policy covers injuries or damage caused unintentionally by you, your family, or pets. It also pays for medical bills or lost wages of non-household members injured on your property. This type of coverage is usually set at a low limit. 

Additional Living Expenses Coverage

Additional living expenses coverage for housing costs, if damage from a covered risk renders your home uninhabitable, is usually included in homeowner’s policies. It is sometimes called loss-of-use coverage, traditionally set at 20-30% of your dwelling coverage.

For example, a severe thunderstorm uproots a tree and crushes your roof. Since your house is in disrepair, you would need to move somewhere else. At the same time, the repairs are made, and your additional living expenses coverage would pay for a modest rental home or hotel and related costs, such as restaurant meals.

You’ll need to carefully keep track of these expenses, as the insurance company will require receipts to reimburse you. And, you’ll want to be sure that this is the kind of coverage you need, as it generally limits how long it will cover your costs and how much it will pay out. Often, it is a separate check from your home repair or personal possessions claim payment.

Personal Possessions Coverage

Homeowners insurance coverage safeguards your belongings from loss, minus the home insurance deductible, up to a specific limit. It’s also referred to as personal property coverage or contents insurance.

Most homeowners policies provide between 50% and 70% of the dwelling coverage for your possessions. Jewelry, firearms, and other valuables in this category may have particular limits (sub-limit). These items are typically more expensive than your standard clothing and household items.

To determine how much personal property coverage you need, begin by doing a complete inventory of all your belongings. Write down each item and its estimated value, taking photos to provide a visual record. You can also use an online home inventory calculator.