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There are several parts of an insurance policy that can be quite confusing -- deductibles, exclusions, inclusions and more. Below is a a rundown of the basic parts and protections offered by a respectable homeowners policy.

Every homeowners policy is a variant of a standard policy utilized throughout the insurance industry. Any type of coverage that is more than the standard is considered an exclusive feature from your insurance carrier. The typical policy is made up of two sections and six areas of coverage, known as A through F.


Section I is made up of areas A, B, C, and D:

Coverage A (Dwelling)

Applies to the structure in which you live. This covers the dwelling, attached structures (such as a porch or garage) and property that is permanently installed (such as wall-to-wall carpeting).

Coverage B (Other structures)
This applies to other structures on your property. This would cover a garage or work shed that is not attached to your home permanently.

Coverage C (Personal property)
applies to the content of the dwelling. This area would cover your property anywhere in the world. There are dollar limits on specific items that you should be aware of because if your property exceeds these amounts, or no amount is specified, you should cover them for an agreed amount.

Coverage D (Loss of use)
Relates to your dwelling when it is uninhabitable due to a loss that is covered by your plan. All of your additional living expenses (specifically those needed to sustain a normal standard of living) or fair rental value (income lost from renters).

Section II consists of areas E and F:

Coverage E (Personal Liability, Bodily Injury and Property Damage)
Comparable to Coverage C (Personal Property coverage). You will be covered when you are on or off your premises and will cover you when you are legally responsible for an act that causes damage to someone else's person or property.


Coverage F (Medical Payments)
Covers medical costs resulting from injuries that are incurred by others while they are on your property.

There are other items that are automatically covered by every homeowner's insurance policy, including the costs involved in defending a claim, damage to the property of others, and first aid when a third party is injured.

Another type of coverage that can be purchases is called no-fault coverage. This covers property that is borrowed, i.e. damage incurred to a pair of shoes borrowed from your neighbor.

Related Reading:
-Understanding Auto Insurance
-Credit Card Insurance


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