The Complete Guide to Homeowners Insurance — Understanding Coverage A to F

Why Understanding Your Homeowners Policy Matters Homeownership is one of the cornerstones of the American dream — but it's also one of the biggest financial responsibilities most people will ever take on. Protecting that investment isn't just about having an insurance policy; it's about having the right insurance policy. As Karl Susman explains on Insurance Hour, many homeowners don't truly understand what their policies cover — or worse, what they don't. A homeowners policy isn't a one-size-fits-all product. It's a legal contract with layers of protection that can mean the difference between recovery and ruin after a disaster. This guide breaks down the essential components of homeowners insurance — Coverage A through F — so you can make informed choices, avoid costly gaps, and ensure your home and lifestyle are fully protected. Coverage A: Dwelling — The Structure of Your Home Coverage A is the foundation of your homeowners insurance. It protects the physical structure of your home — the walls, roof, floors, and built-in fixtures like cabinetry and plumbing. The most important number in your policy is your replacement cost — the amount it would take to rebuild your home after a covered loss, such as a fire. Contrary to popular belief, this number has little to do with your home's market value. Rebuilding costs fluctuate based on material prices, labor shortages, and local construction demand. For example, after a major wildfire or earthquake, the cost to rebuild skyrockets due to high demand and limited resources. That's why Susman stresses the importance of using accurate cost estimators or professional inspections to determine your replacement value. A smart policy also includes extended replacement cost coverage, which provides an extra cushion — often 25% to 50% above your insured limit — to cover unexpected cost spikes. Without it, you risk being underinsured just when you need coverage most. Coverage B: Other Structures — Beyond the Main House Coverage B protects structures that aren't physically attached to your home, like detached garages, gazebos, sheds, retaining walls, pools, or even elaborate landscaping. Most policies automatically include coverage for other structures at 10–20% of your dwelling limit. So if your home is insured for $500,000, you may have $50,000 to $100,000 of coverage for other structures. However, Susman warns that many homeowners overlook this section — and later discover their outdoor features aren't fully protected. If you've invested in a high-end pool, custom stonework, or backyard kitchen, review your policy to ensure those features are properly covered. Other structures can even include smaller dwellings, such as guest houses or "granny flats," though these may require specialized policies depending on occupancy or rental use. Coverage C: Personal Property — Everything That Falls Out When You Shake the House Personal property coverage protects your belongings — furniture, clothes, electronics, appliances, and other items that aren't part of the home's structure. Susman uses a vivid example: "If you ripped off your roof and shook your house — everything that falls out is personal property." Typically, this coverage equals 50% to 70% of your dwelling limit. So if your home is insured for $600,000, you could have up to $300,000–$420,000 in personal property protection. But here's the catch: not all personal items are treated equally. Policies include sublimits for high-value categories such as: • Jewelry (often capped at $1,500–$2,500) • Cash (usually $200–$500) • Firearms, fine art, collectibles, or electronics To protect valuable possessions like engagement rings, artwork, or rare collections, you'll need to schedule them separately or add a personal articles floater. Always inform your agent about these items — insurers can't cover what they don't know about. Coverage D: Loss of Use — When You Can't Stay Home If your home becomes uninhabitable after a covered loss, loss of use (also called additional living expenses) helps pay for temporary housing and related costs. This coverage may reimburse you for hotel stays, apartment rentals, meals, storage, and even extra commuting costs while repairs are underway. Policies provide this coverage in one of two ways: • As a percentage of Coverage A (commonly 20%) • As a "reasonable cost" limit for a specific duration (e.g., 12–24 months) Susman recommends the latter when available, as time-based limits often offer greater flexibility. After widespread disasters, when hotels and rentals are scarce, the cost of temporary housing can soar — and time-based policies help ensure you aren't capped by an outdated dollar limit. Coverage E: Personal Liability — Protecting Your Finances and Future This is argu...