1 min read
Insurance policy paperwork

Whether owning or renting property, having proper insurance coverage is important. Now may be good time for people to check with their insurance provider to make sure that their current policy provides an adequate amount of coverage for their property.

Understanding Insurance Coverage

There are different packages of home insurance offered to protect both the home and its belongings. People must look at each option and determine which package is right for their situation. Each package protects against a specified number of events that cause damage to the property, such as fire, windstorm, and theft.

In addition, each package policy usually contains coverages that are typically overlooked or undervalued. These coverages may include

  • Additional living expenses or loss of use coverage. This pays the additional costs of living away from home if a house or rental unit is inhabitable because of damage from a fire, storm or other insured disaster.
  • Personal liability. This covers against lawsuits for bodily injury or property damage sustained by others for which members of the household are legally responsible for.

One of the most misunderstood aspects of insurance coverage is Replacement Cost versus Actual Cash Value. People can choose to insure their home and its contents for either replacement cost or actual cash value. Replacement cost is the cost to rebuild the home or repair damages using materials of similar kind and quality. Actual cash value is the value of the home and its contents minus deductions for depreciation (age, wear, and tear).


The National Association of Insurance Commissioners provides a Consumer’s Guide to Home Insurance to assist you in making informed choices. Visit the NAIC website to view this guide.

Did you find this helpful?