In the U.S., each state has authority to regulate insurance. States can define insurance terms differently, as can insurance companies. The types of coverage that apply to a covered property can usually be divided into categories. Dwelling insurance is, by many state and insurance company descriptions, not in opposition to homeowners’ insurance. Instead, dwelling insurance may be thought of as one component of homeowners’ insurance.
Dwelling insurance is coverage that provides for the replacement or the repair of a destroyed or damaged home. It can include attached structures. As an example, a home may have an attached deck, attached barn, balconies and garage. Included in dwelling insurance are damage to any permanently installed systems or fixtures such as electrical wiring, plumbing, centralized heating and air conditioning. The coverage amount is usually a percentage of what it would cost the insurer to rebuild the home completely. Some policies provide replacement coverage, up to and sometimes even over the policy limit.
Other Structures Insurance
Unlike dwelling insurance, other structures insurance provides coverage for structures not attached to the dwelling. Some of these may be separated from the main house or connected to the main house by a fence, but they are not attached in any other way. For example, a guest house or cottage, a tool or potting shed, or a detached garage could all be covered under other structures.
Personal Property Insurance
The contents contained in the dwelling are considered to be personal property. They are not the integral installed systems of the house. Personal property usually includes appliances, furnishings and clothing. Insurance policies can vary, and not every piece of personal property is necessarily covered. Some items such as jewelry and firearms may be covered but only to certain limits unless the homeowner itemizes and specifically purchases insurance for them. Personal property insurance provides reimbursement to the homeowner within the terms and limits of the insurance policy should the personal property be damaged, stolen or destroyed.
Loss of Use Insurance
If a covered peril renders the dwelling uninhabitable, loss of use insurance helps cover the costs of living somewhere other than the dwelling. If a covered house is destroyed by fire, and the family needs to rent a temporary place to live, loss of use coverage is likely to help cover these extra costs so the insured can sustain a normal standard of living while the home is repaired or rebuilt.
A homeowner could be exposed to financial liability if someone other than the insured family is injured at the home or his property is damaged. Liability insurance helps protect the insured homeowner against potentially devastating financial loss in the event the homeowner is liable.