As you compare prices in your home insurance quotes, make sure to account for differences in the coverages in each quote.
Your dwelling coverage pays to repair damage to your home from a covered peril, such as a fire or fallen tree.
If you have a mortgage, your lender will likely require your policy’s dwelling limit to match your home’s replacement value, or the estimated cost of rebuilding it. You can typically choose a lower dwelling amount if you have a low loan balance or no mortgage at all.
Insurance companies typically calculate your dwelling limit for you based on details you provide about your home. Make sure the information they have about your home is accurate.
The other structures coverage in homeowners insurance applies to sheds, detached garages and other structures not attached to your home.
Most insurers offer this in default amounts ranging from 10% to 20% of your dwelling limit. Consider asking for more if you have a cottage, converted garage or other detached structure that may be expensive to rebuild.
The personal property coverage in homeowners insurance covers your belongings. This includes your appliances, furniture, clothing, electronics, gadgets and other stuff.
Most policies provide personal property coverage in default amounts, but you can ask for a higher limit if necessary.
One of the best ways to know how much personal property coverage you need is to create an itemized list of your possessions and add up their value.
If you’re pressed for time, accept a default limit and adjust your coverage after you compile your personal property inventory. Just don’t put it off for too long.
Make note of the type of personal property coverage in each quote, and consider additional coverage for any valuables you may have.
Tip: If you can’t decide between replacement cost and actual cash value coverage for your belongings, ask for separate quotes showing your rate with each coverage type.
Loss of use
If a covered peril leaves your home uninhabitable during repairs, your loss of use coverage pays for rent and other temporary living expenses until you move back home.
A common default amount is 20% of your dwelling limit, but many companies cut off your loss of use benefits after a set period of time, such as a year.
This coverage is rarely a dealbreaker, but higher limits and no time limits are better.
Personal liability and medical payments
The personal liability coverage in homeowners insurance covers injuries or damage you cause to others, generally while not operating a vehicle.
Medical payments covers medical costs of a guest visiting your home who gets hurt, regardless of fault.
Both are offered in default amounts, but you can increase your limits.
- Your personal liability limit should match your net worth.
- The default limit for medical payments coverage is enough for most people.