Different Types of Homeowners Coverage Explained


Homeowners insurance can seem complicated, but there are a few common terms you’ll hear time and again. What do they all mean? Read below for a rundown of common terms associated with homeowners insurance, their meaning, and how they can help you protect your home and the things in it!

Replacement Cost Coverage: Pays the full amount to repair or replace your damaged possessions, regardless of depreciation.

Actual Cash Value: Pays for covered losses to your home up to the current value. In other words, the value of these losses, minus depreciation.

Guaranteed Replacement Cost Coverage: Pays repair and replacement costs up to 125 percent of the insured value of your home. This can be useful if, for example, a tornado does such extensive damage that you have to completely rebuild your home.

Umbrella Liability Coverage: Can extend the protection provided by your homeowners and auto policies — for example, if you are in an accident and your medical bills go beyond what your auto insurance can pay.

Residential Equipment Breakdown: For the electrical items not covered under your homeowners policy (think: air conditioner, appliances, computers), Residential Equipment Breakdown coverage can help ease the pain that replacing these can cause to your wallet.

Personal Property: For those other items that may not be entirely covered by your homeowners policy (antiques, jewelry and other valuables), personal property (or Inland Marine Coverage) can help protect these objects from loss or theft.

Now that you’ve brushed up on the different types of homeowners insurance and your homeowners vocabulary, talk to your Farm Bureau agent! He or she can help you sort through the coverages you need so you can protect the things that matter most to you.

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