Home insurance policies come in several types, called “policy forms.” The most common is special form (HO-3).
It covers damage to your house and personal belongings from most causes except those that are specifically excluded. These include earthquake and flood. Also, it protects your liability when someone is injured on your property.
Coverage for Detached Structures
You may be surprised to learn that most home insurance policies also include coverage for detached structures such as garages, sheds and fences. This is a great feature to have especially if you rent out a portion of your property.
Coverage B is usually part of the standard homeowners policy and covers these structures under a peril like wildfires, vandalism, falling objects, explosions and wind damage.
Typically, other structures are covered for up to 10% of the dwelling portion of your homeowners policy. This amount can be increased by increasing the dwelling limit of your homeowners policy.
Coverage for Personal Belongings
A home insurance policy may protect your personal belongings if they are damaged or stolen. It can cover items that are kept in your home, as well as away on vacation or in a storage unit.
Policies generally provide coverage on a named peril basis, meaning that the causes of loss are specifically listed in the policy. This type of coverage is a good choice for the most common risks, including fire, theft, wind and vandalism.
Depending on the nature of your personal property, you can choose to insure it at actual cash value or replacement cost. In the first case, your insurer will pay you the amount it would have cost to replace your item, minus depreciation.
Choosing the right coverage option is a personal decision and it is important to understand how your policy works. You should also consider the limits on your policy, which typically are estimated as a percentage of your dwelling value.
Coverage for Neighbors
Neighbors can cause damage to your home that you might not expect. It can be something as serious as fire and flood or as seemingly harmless as Dennis the Menace from next door accidentally kicking a football through your kitchen window.
Most homeowners insurance policies don’t cover damage from neighbours. However, it’s worth checking your policy to see if there is coverage in place for this type of damage.
A common example is when a tree falls on your neighbor’s property. In this situation, it would be up to your neighbor’s homeowner’s insurance to pay for the damage to their property.
Your homeowners insurance also covers you against lawsuits that could be filed if a neighbor gets hurt on your property. This coverage is called liability and is usually included in the standard homeowner’s policy.
Coverage for Legal Liability
Liability insurance coverage can help cover your legal fees, medical expenses and other costs if someone is injured on your property or you’re sued for causing them harm. Most homeowners policies offer a $100,000 to $500,000 limit for personal liability coverage.
This covers injuries to people on your property or in other areas outside the house, including accidental damage or negligence from you or members of your household. This can include claims for accidental injury to visitors or neighbors, accidents caused by pets or if someone falls and breaks their ankle on your property.
Your home and contents insurance policy may also include coverage for medical payments to others, a form of liability that pays for the cost of treatment if an injured person is a guest or a neighbour on your property. This coverage generally reimburses the injured person for medical bills and lost wages.