You may be confused about the function of homeowners insurance, because it is often spoken of in conflicting ways. Does it protect the value of the home against damages or loss? Does it protect your family against liability claims? Does your homeowners policy protect your personal property? The fact is, a homeowners insurance policy serves several functions concurrently, and it is possible to file claims for any of these things, either together in one claim or as separate claims as they arise.
Primarily, a standard homeowners insurance policy serves the function of protecting you against the damages or total losses covered in the policy. This includes protection against destruction or damage by named perils, including such things as theft, vandalism, and fire. For this reason, it is vital that the value of your home policy is equal to at least the replacement value of the home. Since some policies only cover actual cash values that may not provide complete repairs, make certain that your policy is written for full replacement value, not actual cash value.
Another one of the functions of home insurance is to protect against liability claims. If a tree on your property falls on your neighbor's home or car, your home policy should include liability coverage to repair or replace the car. Similarly, liability coverage should include damages if your daughter hits a fly ball through the store window across the street. And if someone outside of your family trips on a loose brick in your sidewalk, the liability portion of your policy should not only pay their medical treatment, it should protect you against any potential lawsuits arising from that loose brick.
Personal property protection is also part of the standard homeowners policy, but this is another area where care should be taken. Since a standard homeowners policy only covers personal property up to a percentage of the policy value, make sure that your policy will cover everything you own. The average family may own many thousands of dollars in property, including jewelry, tools, furniture, appliances and everything else your family has acquired, an amount that often goes much higher than the default amount of personal property coverage.