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A Homeowner policy is an expanded Standard Fire Insurance Form with built in endorsements and added coverage. Lenders usually require a Homeowner Insurance Binder or Certificate of Insurance, by the closing date, if the insurance isn’t in place then the sale of the house won’t close.
Lenders won’t pay for property that’s not properly insured, and some lenders may require specific types and coverage amounts to be sure they don’t lose money if there is a disaster.
Many states also require Homeowners have additional specific types of insurance, such as earthquake or flood insurance if the risk is greater.
The Declaration Page of a typical Homeowner Insurance policy will include several sections, each section outlines a specific type of property or liability and the amount of coverage the policy provides.
- Section I– Dwelling Insurance: is the amount of insurance needed to replace the actual structure of the house, outbuilding and detached garages. This is usually based on the estimated cost to rebuild the house. In some cases lender’s will require a specific amount, often the amount of the loan.
- Section II–Personal Property: is the amount of insurance for all the household contents, including furniture, clothing, appliances and electronics anything and everything. If everything was lost in a fire what would need to be replaced? Everything inside the home.
- Section III–Liability Insurance: is the amount of insurance to protect against financial loss if found legally responsible for someone Else’s injury or property damage.
- Section IV–Medical payments: Otherwise known as “Good Will Coverage”. This is the amount of insurance the policy offers to pay medical bills for anyone injured on your property, and in some cases injuries that happen away from the property, such as your dog biting someone!
- Section V–Loss of Use: this insurance covers the living expenses if the home and property is destroyed or so damaged that it can’t be lived in while repaired.
These are the basic sections to a typical Homeowner policy, there may be other endorsements or riders added to the basic homeowner policy. Earthquake or Additional coverage for art, jewelry, or computer equipment. Be sure to review your whole insurance policy including any exclusions or conditions.
You may also want to find out about Flood Insurance or any other special insurance you might need for your home.
Related Blogs:
- The Standard Fire Insurance Form
- Household Inventory–Getting Started.
- Flood Disaster
- Earthquake Insurance
Glossary of Insurance Terms:
A | B | C | D | E | F | G | H | I | J-K | L | M | N | O | P | Q-R | S | T | U-V | W-Z
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