If you are the owner of a single family residence, your home needs to be protected with a comprehensive insurance policy.  This policy is called a “homeowner’s policy”.  If your home is severely damaged or destroyed, it is important for you to be able to interpret and understand  your policy.  Your home can be damaged by a multitude of disasters including, but not limited to, flood, storm, water, tree, tornado, and fire damage.  The first step is to read your policy or call your agent to be sure your policy covers the damage.  Your homeowner’s insurance is a multi-faceted policy that generally contains three, and possibly four, components.  Below we will explain each of these components in detail.

1. Building Coverage.  This applies specifically to the structure of the building.  The entire dwelling, including all attached items (furnace, hot water heater, stove, HVAC system) are protected.  It is essential that you are insured for at least 80% of the value of your home in order to avoid a penalty known as co-insurance. 
2. Contents Coverage.  This applies to all of the personal property in your home, including “plug in” items, such as microwaves (if not built in), refrigerators, televisions, washing machines, dryers, and computers.  Of course, all of your clothing and furniture are covered.  You  may need a “rider” or additional policy to cover valuables, such as jewelry, artwork, and collections (coins, stamps, cards).  Your contents coverage is generally 50% of your building coverage.
3. Additional Living Expense (ALE).  This entitles you to be paid for your living expenses for a reasonable period of time that you are displaced from your home if it is not habitable.  You are also entitled to be compensated for additional expenses such as food and utility bills.  These expenses are limited to additional expenses over and above what your pre-existing expenses would have been.
4. Additional Coverage.  This would pertain to additional structures located on your property, such as a detached garage, shed or above ground pool.  Once again, it is necessary to check with your agent to see if any of these items are covered.