Homeowners insurance policies include four essential types of coverage:

1.  Coverage for the structure of your home

2.  Coverage for your personal belongings

3.  Liability protection

4.  Additional living expenses

The Structure of Your House:

Your homeowners policy pays to repair or rebuild your home if it is damaged or destroyed by a covered peril such as fire, hurricane, hail, lightning or other perils listed in your policy.  It will not pay for damage caused by a flood, earthquake or routine wear and tear.

Most policies also cover detached structures such as a garage, tool shed or fence—generally for about 2 - 10 percent of the amount of the dwelling coverage.

Your Personal Property:

Your furniture, clothes, and other personal items are covered if they are stolen or destroyed by fire, hurricane or other insured perils.  The coverage is generally 25 to 50 percent of the  dwelling coverage.  However, you will need to discuss this with your agent to determine the proper coverage for your personal property.

Personal property coverage includes items stored off-premises— this means you are covered anywhere in the world.  Most companies limit the amount to 10 percent of the amount of insurance you have for your personal property.  You also have up to $500 of coverage for unauthorized use of your credit cards.

Expensive items like jewelry, furs, art, collectibles and silverware are covered, but there are usually dollar limits.  To insure these items to their full value, add a scheduled personal property endorsement or stand alone policy.  Any one item valued over $2,500.00 will need an appraisel completed in the last 3 years to confirm its stated value.

Trees, plants and shrubs are also covered under standard homeowners insurance—generally for about $500 per item. Trees and plants are not covered for damage by wind or disease.

Liability protection:

Liability covers you against lawsuits for bodily injury or property damage that you or family members cause to other people.

The liability portion of your policy pays for both the cost of defending you in court and any court awards—up to the limit stated in your policy.

Liability limits generally are $300,000, however, it’s a good idea to discuss with your agent whether you should purchase a higher level of protection.  If you have significant assets and want more coverage than is available under your homeowners policy, consider purchasing  an umbrella or excess liability policy, which provides broader coverage, including claims against you for libel and slander, as well as higher liability limits.

Your policy also provides no-fault medical coverage, so if a friend or neighbor is injured in your home, he or she may be covered for their medical bills up to the medical coverage limit on your policy.

Additional living expenses (ALE):

ALE pays the additional costs of living away from home if you cannot live there due to damage from a covered peril.  It covers hotel bills, restaurant meals and other costs, "over and above your usual living expenses", incurred while your home is being rebuilt.

Keep in mind that the ALE coverage in your homeowners policy is limited to the ALE coverage amount in your policy.

Your ALE coverage limit is separate from the amount available to rebuild or repair your home.  Even if you use up your ALE your insurance company will still pay the full cost of rebuilding your home up to the policy limit.