Dwelling coverage pays to repair or rebuild a home if damaged or destroyed by fire, hail, lightning, or other disaster listed in the policy up to the coverage limit in the policy. It will not pay for damage caused by a flood, earthquake, routine wear and tear or other excluded events. Most standard policies also cover structures that are not attached to a house such as a garage, tool shed, or gazebo.
Our view is that you should have enough to rebuild your home in the event of a total loss. Often, this is not the same as the current market value of your home.
Liability coverage protects against lawsuits for bodily injury or property damage that policyholders or family members cause to other people. It also pays for damage caused by pets. The liability portion of the policy pays for both the cost of defending the policyholder in court and any court awards—up to the coverage limit in the policy. Coverage is not just at the home but extends to anywhere in the world. Liability limits generally start at about $100,000.
An umbrella or excess liability policy, which provides broader coverage, including claims for libel and slander, as well as higher liability limits, can be added to the policy.
Our view is that you should balance buying liability limits high enough to cover your net worth with what you can afford. Possibly add an umbrella policy for higher net worth individuals
Additional Living Expense coverage pays the additional costs of living away from home if a house is inhabitable due to damage from a fire, storm or other insured disaster. It covers hotel bills, meals and other living expenses incurred while the home is being rebuilt. Coverage for additional living expenses differs from company to company.