How to read your home insurance policy
What the parts of a home insurance policy mean, so you know what your own document says before you talk to your insurer, agent, or attorney.
A homeowners policy covers the structure of your home, your belongings, and your liability to others. The dwelling limit, often labeled Coverage A, is the most the policy will pay to rebuild the main structure after a covered loss.
Whether a loss is paid at replacement cost or actual cash value changes how much you receive: replacement cost pays for new materials of like kind, while actual cash value subtracts depreciation for age and wear. Standard home policies exclude flood damage, and many apply a separate, usually larger, deductible to hurricane losses.
The parts to find on a home insurance policy
- Actual cash value
- Pays replacement cost minus depreciation for age and wear, so older items are paid at less than what it costs to replace them.
- Coverage A
- The dwelling limit: the most your policy will pay to rebuild the main structure of your home.
- Hurricane deductible
- A separate, usually percentage-based deductible that applies to hurricane damage, often larger than your standard deductible.
- Law and ordinance
- Helps pay the extra cost of rebuilding to current building codes after a covered loss, which a basic policy may exclude.
- Replacement cost
- Pays to repair or replace damaged property with new materials of like kind, without subtracting for age or wear.
- Water backup
- Coverage for water that backs up through sewers or drains, or overflows from a sump pump. It is a small add-on with its own limit, separate from flood.
What UnderstandMyPolicy shows you
Upload your own home insurance policy and it reads the document and explains what it says, with every answer cited to the page and clause. It reports what your policy states, not whether your coverage is enough — that is a conversation for you and a licensed agent or attorney.