What does homeowners insurance cover?

Homeowners insurance provides protection for your home, personal property such as furniture, clothing, appliances as well as for personal liability. It protects you from a variety of events, including fire, lightning, burglary, vandalism, storms, explosions, and more..

Frequently Used Home Owners Insurance Glossary of  Terms

Additional Living Expense
Fire damage or other covered loss could increase your living costs-you may be paying for a hotel, restaurant meals or laundromat, for example. In a standard homeowner policy, Loss of Use (Coverage D) will reimburse you for any additional living expenses incurred by you in an attempt to maintain a normal standard of living if your home is made uninhabitable by a covered peril. See Loss of Use.

Bodily Injury (BI)
An important type of liability coverage, BI will pay legal damages awarded for injury or death for which you are held legally responsible.

Appurtenant Structure
In a property insurance policy, "appurtenant structures" are buildings on the same premises as the main, insured building. Appurtenant structures like garages or barns on your property and are usually covered by homeowner insurance policy.

Arbitration Clause
 In your property insurance contract, the arbitration clause provides a means for settlement when you and your insurer cannot agree on an acceptable claim payment. Appraisers representing each party select a neutral arbitrator; a judgment by any two of these three constitutes a binding settlement.

Broad Theft Coverage
An endorsement to a dwelling policy which provides theft coverage for contents to a named insured, owner occupant.

Business Personal Property
In a homeowner policy, "business personal property" refers to items or "contents" owned by your business or company-like the lap top you might bring home over the weekend. Coverage is usually limited to $2,500.

Coverage A
Called "Dwelling", this is the part of your home insurance policy that covers the home itself-frame, flooring and fixed objects. The amount of Coverage A is the cost to replace the structure of your home in the event of total loss. Other coverages are usually based on a percentage of Coverage A.

Coverage B
This part of your policy covers "Other Structures"-barns, sheds, garages.

Coverage C
"Personal Property" covers your belongings automatically for 50% of Coverage A.

Coverage D
"Loss of Use" takes into account expenses you'll have if your home is uninhabitable because of a covered loss. It pays for temporary lodging and living expenses.

Coverage E
"Personal Liability" covers you for your legal responsibility for injury caused to others whether on or away from your own property.

Coverage F
"Medical Payments" pays medical costs if someone is injured on your property. A homeowner policy automatically covers $1,000. You can increase this coverage in $1,000 increments, up to $5,000. In order to collect more than this, the injured party must file for compensation under Coverage E.

Debris Removal Clause
While most property policies cover only direct damages caused by an insured peril, the "debris removal clause" covers the cost of removing debris produced by the peril's occurrence. For example, a hurricane sweeps through the state; a fallen tree will be removed only if it lands on your house. Debris Removal reimburses you for the cost of cleaning all the broken limbs and rubble.

 Direct Loss
This is a damage or loss resulting as a direct consequence of an insured peril. For example, a computer lost in a fire is a direct loss; the data destroyed inside the computer is considered an indirect loss.

Direct Writer
When an insurance company offers its policies directly to consumers through its own employees, it's called a "direct writer." Electric Insurance Company is a direct writer.

Dwelling Forms
These are polices which cover a residence dwelling or building and the personal property inside. You can buy dwelling forms which vary by the degree of coverage they offer.

Earthquake Endorsement
Most homeowner policies exclude coverage for earthquake damage. People who are concerned about the risk of earthquakes can add an Earthquake Endorsement to cover damages.

Easement
An "easement" entitles its holder to specific interests, such as a right of way, in land owned by someone else.

FAIR
An acronym for "Fair Access to Insurance Requirements," FAIR offers insurance to people in high-risk areas who might otherwise be denied coverage. Reinsured by the United States government, FAIR is a pooling plan with policies for fire and allied perils.

Fire
In property insurance, "fire" refers to the unintentional or "hostile" occurrences of flame and combustion. Damage caused by fire in your fireplace, for instance, is not covered under your homeowner policy. But if your rug were ignited by a spark from that same fireplace, you would be covered.

Fire Resistive Construction
Building construction using fire-resistive materials in its roof, floors and exterior walls. See also Modified Fire-Resistive Construction.

Fire Wall
A wall designed to contain or seal off fires in a building.

Fireproof
Unfortunately, no one can make a building completely undamageable by fire. Today, insurers use the term "fire-resistive" to describe buildings which are practically resistant to most fire damage.

Flood
A temporary submersion, partial or complete, of ordinarily dry land by water or mud. Floods are typically caused by an overflow of waters, whether inland, tidal or from any accumulated runoff from any source. Flood is excluded under a typical homeowner insurance policy.

Flood Insurance
Policies sold to cover property owners from losses caused by floods or flooding, usually offered in conjunction with a government flood insurance plan.

Frame Construction
The most common form of housing construction, frame buildings are made primarily of wood frames and joists.

Guaranteed Replacement Cost
Guaranteed Replacement Cost coverage on homeowners insurance means that your home will be repaired to its value at the time of loss, reguardless of the amount of coverage carried. For example, you estimate your home to have a full replacement value of $162,000. On your homeowner policy, you carry $162,000 coverage for the structure. If you have guaranteed replacement cost endorsement on your policy and the home is lost in a fire and the house costs $168,000 to rebuild, the policy will pay $168,000.

Homeowner Policy
Combined property and liability insurance that covers homeowners and renters for damage to or theft of their property and liability, in case they are responsible for injury to another person.

Increased Cost of Construction Insurance
Commonly added as an endorsement to homeowner policies, "increased cost of construction insurance" covers the additional costs of building repair or reconstruction when you rebuild with more expensive services, materials and techniques required by local ordinances.

Increased Hazard
Property insurance terms are tailored to the nature and use of the property as it exists when the policy is written. Should you introduce dangerous materials or activities into the property, like making fireworks, you will have added an increased hazard whose liabilities would not be covered by your policy.

Indirect Loss
Also known as consequential loss or damage, indirect loss results from, but is not caused directly by, a peril. If your business property burned down, for instance, the property itself is a direct loss, while the lost business revenues would be considered an indirect loss.

Inflation Guard Coverage
 "Inflation Guard Coverage" provides automatic periodic increases on the building's property insurance, to reflect the effects of inflation on building replacement expenses.

Inherent Vice
A property flaw or fault which causes its own destruction. Damages from inherent vices are usually not covered through insurance.