Generally speaking, property damage refers to the damage wrought on the home property by the disasters covered under a typical home insurance plan.  The amount of coverage will actually depend on the amount of premiums, the property valuation, and the insurance policy procured.  Aside from the home itself, other attached properties also get limited coverage under this type of home insurance benefit.  However, there are two main types of property covered under the home insurance, namely the home structure and the home contents.

Home Structure Property Damage

After a calamity covered under the policy terms, damage sustained by the physical structure or domicile is essentially covered under the property damage part of the home insurance.  This will include all the main house’s parts like the roof, the walls, doors, windows, etc.  In some home insurance policies, there will be restricted coverage for the garage, the shed, the gazebo, etc.  The average coverage for such attached structures is around 10% of the insurance amount for the main house.  This is, of course, negotiable depending on the policy and the amount of homeowner’s insurance premiums.

Personal Property Damage

Personal property damage is also covered under a basic home insurance policy.  Personal property refers to the policyholder and his or her family’s personal belongings that are damaged due to the same incidents specifically covered under the policy.  Moreover, personal property missing due to theft or burglary is also generally covered under the home insurance policy.

Personal property will definitely include household furniture and furnishings, appliances, clothes, shoes, sports equipment, computers, and others.  Personal property valued at more than average amounts such as money, jewelry, antiques, paintings, and silverware among others may be included under this coverage if specifically stated in the policy.  Otherwise, these items are generally excluded.  If insurance for them is desired, however, additional coverage can be purchased from the home insurance provider and may even include cover for merely lost or misplaced valuable personal property.

Most home insurance policies that include coverage for personal property damage and loss usually offer coverage even if insured property were damaged in transit or off the premises.  The policyholder may opt to remove this off-premise property damage coverage.  Moreover, such policies oftentimes include limited coverage for unauthorized credit card purchases.

The face amount for property damage home insurance coverage may be for the replacement cost of damaged, stolen or lost property, or the actual cash value of the same.  This is applicable both on the home structure and the insured property belongings.

Replacement Cost Value Coverage

The home insurance policy holder who takes this option is insured or covered for the amount of repairing or rebuilding the structure damaged by included home peril instances as per the terms of the insurance policy.  For instance, if the roof were made of Spanish tiles and it was damaged in a fire, the roof would be replaced with the same quality and type of material regardless of whether or not the roof had already seen 10 years of use.  With replacement cost value coverage, the damaged materials or part of the structure damaged will be replaced as if they were new.

There are insurance companies that require the policyholder to apply for a policy that has a face amount of at least 80% of the whole property’s cost of replacement.  This is a good business practice if the policyholder doesn’t want to pay out-of-pocket expenses for home rebuilding or repair.

For instance, the policyholder's main house, if it were to be replaced, costs a total of US$100,000.  At this point, the homeowner should consider insuring his house with a policy for house structure damage of at least 80% of US$100,000 that is US$80,000.  He or she may apply for insurance property damage to house structure benefit for more than this amount.  But it is highly advised to not get a policy that pays a benefit for less than the aforementioned value in such a case.  If this policy holders’ house suffers a damage that would cost US$70,000 to replace, the insurance company will shoulder the full expense of replacement since the homeowner has insurance that adequately covers the cost.

For instance, if our insurance policy holder were to insure his or her house for only US$50,000, this would make the face amount of benefit only 50% of the cost of replacement.  If his or her house were to sustain the same US$70,000 damage, the insurance company is highly likely to cover only a proportion of the replacement costs.  In this instance, the insurance company is probably going to pay only US$35,000 that corresponds to 50% of the insurance coverage the policyholder has.  In this unfortunate circumstance, the policyholder will have to cover the rest of replacement expenses on his or her own.

Thus, it is important to ensure that the amount of insurance carried for property damage is more than sufficient to cover replacement costs before taking out a home insurance policy.  It is even desirable that the home be insured for its total replacement value so that there will be full coverage in case total replacement is required.

Actual Cash Amount Value

The actual cash amount value type of property damage coverage is a type of home insurance policy benefit that considers depreciation in the computation of payments and losses.  Depreciation is the assessed decrease in the value of a property due to the natural wear and tear that it endures as it ages.

This type of coverage is usually the default benefit for personal property or the contents within the home that are covered under the property damage portion of the home insurance policy.  For instance, if the policyholder were to have a 10-year old sofa that cost US$700 at purchase and this sofa were damaged in a fire - the policyholder will receive compensation for the depreciated value of the sofa.  This means the policyholder will receive US$700 minus depreciation.

If a policyholder would like to cover his or her property belongings for the full replacement value and not for the depreciated value, he or she may do so.  Some insurance policies offer such an option.  However, these policies usually cost more in monthly premiums.

Whatever the type of property damage coverage bundled in a home insurance policy, it is crucial for the policyholder to keep track of the home and its contents’ overall market value.  This would be very helpful in ascertaining the amount of benefit needed.  It is important to remember that home renovations such as addition of rooms and home insulation fixtures increase the home’s replacement value.  Inflation also does its part in increasing a home’s face or replacement value.  However, the actual cash market value is almost always at a decline.

Personal Liability

Liability cover is the financial protection against lawsuits filed when the policyholder together with his or her family and pets cause damage to other persons and/or their property.  This is a financial cover that is present both on-home and off.

In a nutshell, the liability benefits pays for legal and court fees.  This portion also pays for any restitution or compensation costs if the court rules in the other party’s favor.  However, the amount that the insurance company will pay for awards can only be up to the maximum limit of the liability protection portion of the insurance policy.

This personal liability portion of the home insurance policy is usually quite minimal and pretty basic.  A homeowner may feel that he or she requires more coverage for liability.  With this, he or she may take out additional liability coverage, namely an umbrella or excess liability coverage.  These will protect the policyholder and his or her family in cases where the personal liability benefit will not protect them such as in libel and slander, or for amounts that the personal liability cover will not satisfy like higher awards and liability claims.

At this point, it is important to emphasize that personal liability protection only protects the policyholder and his or her family against claims of bodily injury and property damage filed by other individuals outside of the family.  This portion of the home insurance policy will not pay for damage wrought by family members and family pets to their home, and it also would not pay for the medical expenses of the family members and family pets.

No-Fault Medical Coverage

Most insurance policies also cover the policyholder and his or her family against an injury claim that does not get filed in court.  This means the home insurance policy can make payments for medical benefits to somebody other than the policy holder or his or her family for injuries sustained in the policy owner’s home or premises regardless of who is at fault.

For instance, if the postman were bitten by the family’s pet, the postman may decide not to assign liability in court.  The policyholder can still get medical coverage for the postman by instructing him or her to submit his medical bills to the homeowner’s insurance company.  In this case, no liability suit was filed.  There is, however, a limit to the no-fault medical coverage that any home insurance policy will have.  The medical payment portion of any home insurance policy will not pay for the medical bills of the policyholder and his or her family and pets.

Additional Living Expenses

The additional living expenses portion of a home insurance policy will pay for the living expenses incurred while the policyholder’s home is being repaired or rebuilt.  If the policy holder and his or her family have to be temporarily billeted somewhere else, say an apartment unit or a motel room/suite, the insurance company will usually pay a certain amount within reason and within the terms of the policy in order to help pay for the hotel/apartment/motel bills, food expenses and other living expenses that are natural offshoots of the fact that the policy holder's home is temporarily inhabitable.  If a portion of the damaged home were to be rented out, the additional living expenses coverage would also pay for the rental income lost due to the damages.

However, it should be noted that the additional living expenses portion of the homeowner’s insurance could only be activated if additional living expenses are incurred from temporary accommodations.  If the family of the policy holder moves in with a family friend, relative or neighbor while the repair to their home is underway and if there are no extra living expenses incurred, the insurance company will not pay this benefit.  It is also important to remember that different policies have different additional living expenses terms.  Some policies will offer unlimited additional living expenses benefits, but this type of coverage would only usually last up to a designated amount of time.  Moreover, there are policies that have both benefit and time limits.