Home insurance is a financial shield that protects the biggest thing you own—your home—from sudden damage or loss. When you buy a policy, your coverage is divided into three main baskets, each protecting a different part of your financial life.
1. Structure Coverage
This is the most fundamental part of the policy. It covers the physical building against major, unexpected events.
- What is Covered: The actual permanent parts of your house. This includes the walls, the roof, the foundation, the fixed plumbing, built-in electrical wiring, floors, ceilings, and attached garages.
- What it Protects Against: Major disasters like fire, flood, earthquake, cyclonic storm damage, and malicious damage.
- The Goal: To give you the money needed to rebuild or repair the physical building so it can be lived in again.
2. Contents Coverage
This coverage basket protects everything inside your house that you would take with you if you moved.
- What is Covered: All your movable property. This includes your furniture, clothes, electronics (TV, laptop), kitchen appliances, jewelry, and personal items.
- How it Works: If your TV is ruined in a fire, or your clothes are destroyed in a flood, the insurance company will pay to replace or repair those lost belongings, up to a limit defined in your policy.
- Important: You typically need to provide an estimate of the value of all your belongings when you buy the policy.
3. Personal Liability Coverage
This is the coverage that protects your savings and future income if you are sued because of an accident that happens on your property.
- What is Covered: It covers the legal costs and compensation if a guest, a delivery person, or a visitor is accidentally injured while on your property, and they sue you.
- Example: If a delivery person gets hurt at your house because of something you should have fixed (like a broken step), this insurance acts as a shield. It covers their doctor and hospital bills and pays for the lawyer you'll need if they decide to sue you.
- The Goal: To protect you from devastating financial loss due to third-party claims or lawsuits related to your home ownership.