Homeowners
Insurance Q & A
Q: What are the policy limits (i.e., coverage limits) in the standard
homeowners policy?
A:
The dwelling and other structures on the premises are
protected on an “all peril” basis-up to the policy
limits. “All peril” means that unless the policy specifically
excludes the manner in which your home is damaged or destroyed,
there is coverage. The policy limit for the dwelling is set by
the policyholder at the time the insurance is purchased. The policy
limit for the other structures is usually equal to 10% of the
policy limit for the dwelling. This amount may be increased.
Losses
to your personal property are covered on a “named perils”
basis. “Named perils” means that you have coverage
only when your property is damaged or destroyed in a manner specifically
described in the policy. The policy limit for contents varies
with the insurance company but the coverage is equal to at least
50% of the dwelling coverage. Homeowner policies also include
coverage for the additional expenses that a homeowner may incur
when the residence is unlivable because of an insured loss.
The amount of coverage is at least 20% of the coverage limit on
the dwelling.
The
coverage limit on personal liability is determined by the policyowner
at the time the policy is issued. The coverage limit on medical
payments to others is usually set at $1000 per injured person.
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