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Home Owner Insurance The 5 Key Parts of a Policy


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Homeowners insurance has several parts to it. Most policies have 5 key elements that you should be aware of. It is important to look at each of these parts and check the limits of coverage. Do you know what limits to check? Read on!

1. Coverage for the Dwelling Building

If your house is damaged or destroyed by a named risk (called an insured peril) listed in your policy (i. e. fire), then the insurance policy will provide funds to repair or rebuild up to the policy limits.

When you purchase your home insurance it is very important to discuss the limit of coverage for rebuilding purposes. Don't assume it should be the same as your market price, because it is probably different. If it turns out that you are under insured at time of claim it can cause problems. And if your home was damaged you already have enough problems!

Be sure to ask for guaranteed building replacement cost coverage (just in case the costs to rebuild escalate over your policy limit!).

2. Outbuildings (or Detached Structures)

This includes detached garages, garden sheds, and the other structures on the property that but not attached to the dwelling. Many homeowners policies automatically include these structures to a limit of about 15 per cent of the building value. Again, check to see that this limit of coverage is enough.

3. Home Contents Insurance (Personal Property)

All of your personal property can be covered under most home policies. Coverage for contents is in effect if they are destroyed by a named risk. The limit in a home insurance policy is usually based on a percentage of the building value for an additional 50-100per cent coverage. Therefore, if the building is covered for $300,000, the personal property would be insured for $150,000- $300,000.

Always look for Replacement Cost coverage on personal property. And keep in mind that some home contents have special limits in the policy (i. e. jewelry)

Most policies cover your personal property while you are away from home and it is with you.

4. Personal Liability Coverage

The liability portion of a homeowners insurance coverage offers some protection from lawsuits due to bodily injury or property damage for which you are liable. On top of this coverage it is also a good idea to buy a personal umbrella liability policy

If you work from home it is important to disclose any home based business as special liability is likely required.

5. Additional Living Expenses

The last common part of a homeowners policy is Additional Living Expenses (ALE). You probably will need another place to live if your home is being repaired or rebuilt. ALE coverage is for shelter, and related expenses.

It is important to take a look at each of these five elements within your policy. Check the limitations and exclusions and ask an insurance professional for advice and further explanation.

Want to know more about the five key parts of a home owner insurance policy? Visit Home Owner Insurance Policy for more info.

Rob B is a Canadian Insurance broker who is sharing general information on insurance in the hopes that it helps more people get the insurance they need. Please be sure to check your policy for full details! For more of Rob's work please visit


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