Homeowner’s Insurance Coverage A is the part of the policy that covers the home or dwelling itself. That seems simple enough, but wait, there’s more. It also covers any structure that is physically attached to the building. By that it means that it can’t be connected by a fence or a utility line, but rather physically attached to the dwelling. This may include attached decks, carports, patio covers.
When it comes to Homeowner’s Insurance Coverage A the question is always the coverage form, which can vary on the same home based on the occupancy of the home. For example if the home is vacant you might get a basic form with vandalism, theft, and malicious mischief excluded. However, if the home is owner occupied, a rental, or a second or seasonal home you might get a special form, which is always the best option.
One of the most difficult things about coverage A is determining the replacement value of the home which is the cost to rebuild the home as is. Market value is irrelevant as you can’t insure dirt. Land is excluded. Typically agents will use estimating tools to try to figure out a ball park, but appraisals can also be used. It is important to determine because if you don’t insure it for enough, you can get penalized in the event of a claim, and if you insure it for too much then you are paying to much for the insurance every month. Ultimately it is the insureds responsibility to determine the value, but there are things that can help you determine the value.
When it comes to the loss settlement, it often depends on what you choose. Typically you will have the option of replacement cost (the coverage you want) and Actual Cash Value. Choosing the replacement cost option will ensure that you are able to replace the home in the event of a loss. Actual cash value will provide you money as well, but it may not be what it needs to be to replace the home.