Homeowners insurance is a package policy that includes coverage for the dwelling, detached structures, and contents. Additional living expense and personal liability protection are part of the package as well. The insurance policy is a legal contract that describes what is and isn't covered. Also included are policy conditions, loss settlement terms, responsibilities following a loss, and more.

Certain types of losses are too unpredictable or catastrophic to be insured by traditional homeowenrs insurance policies. The exclusion section of the contract outlines these situations. Read through your insurance contract. Pay attention to exclusions as well as restrictions and limitations. For example, policies typically do not cover flood and earthquake damage. Flood insurance can be purchased as a separate, stand-alone policy. Many insurers offer earthquake and other protections as policy add-ons. Discuss problematic coverage gaps with your local homeowners insurance agent.

Your house is a valuable asset. Be certain it has the right dwelling coverage limit. Homeowners insurance is based on replacement cost, which is how much it takes to rebuild the house using like-kind and quality materials. Square feet, year of construction, building materials, number of stories, type of foundation, attached garage, and special features are among the factors that affect replacement cost. Remodeling, a room addition, or deck expansion will increase the replacement cost of your home. Building materials continue to escalate post-pandemic and impact repalcement cost as well. Ask your homeowners insurance agent to determine your home's replacement cost. It is best to insure the structure for its full replacement cost. Underinsuring your home with a limit below replacement cost may lead to a reduced claim settlement.