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Home Insurance and Homeowners Insurance- What’s the difference?

“Are homeowners insurance and home insurance the same thing? My sister told me that home insurance only protects the house whereas homeowners insurance includes liability coverage- is this true?”

It’s a good question, but the truth is, when an insurance agent refers to home insurance or homeowners insurance they are typically talking about the same type of policy. A standard home insurance or homeowners insurance policy includes coverage for the structure of the home and liability.

Here’s how it works:

Your home insurance, or homeowners insurance, policy will include a certain amount of dwelling coverage. Dwelling coverage protects the structure of your home in the event it is destroyed or damaged in a covered peril. Your dwelling coverage is calculated based on the replacement cost of your home. (Here is a Dwelling Coverage calculator  that can help you determine how much dwelling coverage you may need).

Aside from dwelling coverage, your policy will typically also include coverage for other structures on your property such as detached garages and sheds. This coverage is calculated as a percentage of your dwelling coverage.

Your homeowners (or home insurance) policy will also usually include personal property coverage. This coverages replaces the contents of your home if they are lost in a covered peril. This is typically about 50-70% of whatever amount of dwelling coverage you have.

Loss of use is also usually included in a standard policy and pays for alternative living expenses in the event your home is damaged in a covered peril and you can not live in it.

MedPay is the portion of your home insurance policy that covers medical expenses in the event someone is injured on your property and a lawsuit is not involved.

Finally, your homeowners insurance will also include liability coverage. This portion of your homeowners insurance protects you in the event you are presented with a lawsuit. The minimum amount of liability coverage included in a home insurance policy is typically $100,000. However that figure can usually be increased to over a million dollars in coverage if neccessary (and depending on your provider).

So, when you refer to home insurance and homeowners insurance you are talking about the same standard type of policy as outlined above. For more details on home insurance coverage, visit Home Insurance 101.

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