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Now that we have discussed the different types of policies, let’s see how the actual amount of coverage is determined.

Homeowners (HO-2 and HO-3)

Coverage A Dwelling — In order for your home to be protected completely, you should buy insurance which equals the full rebuilding cost of your home rather than the selling price.

Coverage B Other Structures — 10% of Coverage A

Coverage C Personal Property — 50% of Coverage A (can be increased to a greater amount if needed, or decreased to an amount not less than 40% of Coverage A)

Coverage D Loss of Use — 20% of Coverage A (can be increased if necessary)

Example: Your home is insured for $100,000

Coverage A Dwelling = $100,000

Coverage B Other Structures = $10,000

Coverage C Personal Property = $50,000

Coverage D Loss of Use = $20,000


If you don’t maintain enough insurance coverage and your dwelling is damaged, your loss may not be covered in full.

Obviously, if the full cost of rebuilding your dwelling is $100,000 but you buy only a $60,000 policy, and your dwelling is completely destroyed, you will receive only $60,000 in insurance coverage.

But there is another impact of buying too little insurance. If you don’t have the proper coverage and part of your dwelling is damaged (for instance, a windstorm destroys your roof), you may not receive full insurance reimbursement for repairing that part of your home. You may receive only partial reimbursement.

This is true even though the cost of repairing that part of your home would be much less than the face value of your policy.

So, if the full cost of rebuilding your dwelling is $100,000 but you buy only a $60,000 policy and the cost of replacing your roof is $2,000, you would receive less than $2,000 insurance reimbursement. The actual amount would depend upon how underinsured you are, or upon the wear-and-tear depreciation of that portion of your dwelling before the loss occurred.

To receive full reimbursement for your losses under Coverage A Dwelling, you should buy coverage for 100% of the replacement cost of your dwelling. The replacement cost is the amount needed to rebuild the structure, not necessarily the market value. If your insurance coverage is less than 80% of the dwelling’s replacement cost at the time of the loss, you will be considered underinsured and may receive only partial coverage.

How do you determine if you have enough dwelling coverage? We can assist you in estimating the approximate reconstruction cost of your home through the use of a program developed by the leading provider of building cost information. Customers are receiving surveys, which provide details about the various components of their homes, to fill out and return. New policyholders receive these forms after their initial home inspections take place; renewing policyholders get them before receiving their renewal questionnaires. Customers are reminded – it is required to insure homes to their proper value.

Renters and Condo Owners (HO-4 and HO-6)

Coverage C Personal Property — As a service, you will be provided with our Personal Protection Guide and Questionnaire. By completing the easy steps outlined in the Guide, you can determine the estimated replacement cost of your property which will approximate the amount of coverage you need. (Condo owners also can use the Guide to help approximate the amount of real building property you own.)

Coverage D Loss of Use — 20% of Coverage C for Form HO-4, 40% of Coverage C for Form HO-6. This amount can be increased if necessary.

Coverage C Personal Property = $30,000

Example: For an HO-4 Policy, Coverage D Loss of Use = $6,000

For an HO-6 Policy, Coverage D Loss of Use = $12,000


Applies to home owners, condo owners and renters policies.

Coverage E Personal Liability provides coverage for Bodily Injury or Property Damage for which you are legally liable.

Coverage F Medical Payments to Others provides coverage for medical expenses incurred by others.

Neither Coverage E nor F applies to you or any regular members of your household.

All policies automatically provide a Coverage E Personal Liability limit of $100,000 and a Coverage F Medical Payments to Others limit of $1,000. Higher limits are available for a reasonable charge. You may wish to consider choosing a Personal Liability limit consistent with your other insurance at a level not less than $300,000.