What Should My Homeowner’s Insurance Policy Cover?

Homeowner’s insurance generally covers destruction and damages to your home’s interior and exterior and personal property. There are three levels of coverage: Actual Cash Value, which reimburses you in cash for how much the item is worth. Replacement Cost, which is how much it would cost to purchase the item new or replace it. Extended replacement cost or value, which is the cost to rebuild your home, not the market value of the house.

You’d be covered in all cases if there is damage to the interior or exterior of your home as a result of a covered peril. Clothing, furniture, appliances, and most other contents of your home are protected if they’re destroyed in a covered peril. The coverage of items within your home is valued at 50-70% of your home’s value.

Your homeowner’s insurance extends personal liability coverage to you for damages or injuries. Liability coverage protects you from lawsuits filed by others. This coverage also includes your pets. Most policies offer $100,000 payment to cover you, though experts suggest that coverage should be $300,000.

As with all insurance policies, a lower-cost home insurance policy will likely cover you the least amount. Another facet that homeowner’s insurance covers are identity thefts, it does so under identity recovery coverage. Ideally, it reimburses you for expenses related to being the victim of identity theft.