Types of Homeowners Insurance Policies: Which One’s Right for You?

receive full payment (minus your deductible) for a partial loss, you must insure your house for at least 80% of its replacement cost. If you insure for less, the insurance company will only pay for part of the expense of a partial loss. If your home is destroyed and you only have actual cash value coverage, you may not be able to completely rebuild with the claim payment you receive.

With any policy there are exclusions. Your policy typically does not cover injuries to animals or damage to motor vehicles or aircraft. You also are usually not covered for losses due to floods, mudslides, water damage from sewer backups, damage from war or nuclear hazards, neglect, earthquakes, power failures, seepage, dry rot or vermin.

Homeowners insurance policies have different covered perils and exclusions. Check your policy carefully so you understand the kinds and extent of coverage you have.

Five Key Home Insurance Coverage Types

The rates you pay for your standard homeowners insurance policy includes the following essential types of coverage:

Coverage for the structure of your home.

Coverage for other structures.

Coverage for your personal belongings.

Additional living expenses (ALE) also known as loss of use.

Liability protection.

1. The Structure of Your Home

Coverage for the