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Does Homeowners Insurance Cover Property and Liability?

By August 31, 2021September 29th, 2021Home, Umbrella insurance
Oftentimes people ask themselves “what does homeowners insurance cover?” More specifically, whether homeowners insurance covers property and liability protection. The quick answer is yes, homeowners insurance gives you both property and liability protection. However, there is much more to it than that. It is essential that all homeowners, especially those who are new to home ownership, have an understanding of this coverage that protects the most significant investment that many of them will ever make.

About 5.5 million homes are sold each year, and around a third of those go to first-time buyers. These new owners might not be aware that homeowners coverage provides financial protection against loss due to disasters, theft, and accidents. They also might be unaware that most standard policies include four essential types of coverage:

  • Insurance for the structure of the house
  • Coverage for personal belongings
  • Liability protection
  • Coverage for additional living expenses


All four of these elements work together to provide homeowners insurance coverage. While all elements have some degree of importance, the property and liability protections could be responsible for saving a homeowner’s financial life, depending on the circumstances from which they need protection.

Here are the details of what is and is not covered under a typical homeowners insurance policy:


Homeowners insurance covers the structure of the home against fires and other perils

The coverage that protects your dwelling (sometimes called Coverage A) is the part of your home insurance policy that relates to the cost of rebuilding or repairing your home. It comes into play if the house is destroyed or damaged by a covered peril such as fire, hurricane, lightning, wind, or hail.

Homeowners insurance does not typically cover damage from floods or earthquakes. They will require separate policies for protection against these losses.

Most policies, however, do cover detached structures such as a garage, tool shed, or gazebo for about ten percent of the amount of insurance you have on the house itself. The amount of dwelling coverage you choose should be the same as the cost to rebuild your home if there is a complete loss.


What does personal property insurance cover?

In insurance language, personal property is another name for your belongings. This refers to everything a person owns that isn’t a part of the dwelling. It also covers the things your family or friends might have left in the house temporarily. Sometimes it is called contents insurance or Coverage C.

Examples of personal property would be clothing, furniture, bikes, and sports equipment. While the coverage for personal property is usually set at 50 to 70 percent of the amount of insurance on the dwelling, the recommended method for determining the amount of coverage is to conduct a home inventory.

Expensive items like jewelry are covered under the standard homeowners policy, but there are usually dollar limits on them. To insure these items for their full value, you should consider a separate policy. The experts at White Cloud Insurance can help you get the specialized coverage you need.


Homeowners insurance also provides liability protection

The liability portion of your homeowners insurance policy covers you against lawsuits for injury or property damage that you or your family members cause to others. It will also cover damages caused by your pets. In other words, if you, one of your children, or even the dog accidentally ruins your neighbor’s expensive rug, you will be covered.

The liability portion of your policy will pay the cost of defending you in court, and it will pay any court award up to the stated limit in your policy. The homeowners coverage also extends to medical coverage in case someone is injured in your home. The injured person submits medical bills to your insurance company, and they will be paid without a liability claim being filed against you.

Most standard homeowners policies provide a limit of liability of $300,000 for property damages or injuries. This amount can be increased to $500,000, for instance, by paying a higher premium.  Homeowners policies generally have a limit of $1,000 or $5,000 on medical expenses.

Many people purchase a separate umbrella policy as extra liability coverage in case they reach the limit on their homeowners policy. The umbrella coverage would begin after the $300,000 of underlying coverage reached its limit. While umbrella coverage generally costs about $150 to $300 per year, it is best to talk to someone with experience in homeowners insurance and umbrella coverage at White Cloud Insurance to understand what will work best for you.


Additional Living Expenses (ALE) covers you if you can’t live in your home

ALE pays any additional costs you incur while living away from home if you cannot live there due to damage from an insured disaster. It covers hotel bills, restaurant meals, and other costs while your home is being rebuilt.

Ask one of our insurance professionals about property and liability protection coverage

Talk to a White Cloud Insurance expert for advice on any aspect of homeowners insurance coverage. Just fill out our contact form, call us at 305-556-1488, or send us a message at