The basics of any homeowners insurance policy will protect you in the following ways, up to the coverage limits you choose:
Dwelling coverage: Insurance covers your home and property for “covered perils.” Coverage includes damage from fire, smoke, storms, lightning, hail, vandalism and damage from a car. Dwelling coverage is meant to repair your home or completely rebuild the structure if needed. You should get enough dwelling coverage to match your home’s full replacement cost. Replacement cost is not market value. Instead, it’s how much you would need to rebuild your current home.
Liability coverage: Liability protection covers you if you’re sued for bodily injury or property damage caused by you or a family member. Liability also covers legal costs and court damages if you are sued. The standard home insurance policy includes $100,000 of liability coverage but experts recommend at least $300,000.
Personal property coverage: Covers your possessions, such as clothing, furniture, electronics and appliances. Coverage for your belongings is usually between 50% and 70% of your dwelling’s coverage. You can also buy additional protection.
Medical payments: Guest medical covers the medical costs if a visitor to your property is hurt in a minor incident, regardless of liability. Typical limits run from $1,000 up to $5,000. This coverage helps avoid potential litigation or use of liability coverage.
Loss of use coverage: Additional living expenses protection helps you out if a fire, storm or other covered peril damages your home and it is unlivable. The coverage provides compensation to live elsewhere temporarily. That protection includes paying for hotel and restaurant bills and other living expenses. It’s typically 20% of your dwelling coverage amount.