Homeowners insurance is a policy bought to safeguard Floridians by providing compensation for repairing or rebuilding their homes and replacing personal belongings in the event of a covered loss.

Depending on the type of home and the chosen insurer, various insurance packages are available, offering coverage against specific damaging perils or events. This includes protection against perils such as windstorms or hurricanes, fires, and theft.

A policy is typically broken down into six different parts.

• Dwelling coverage, or Coverage A
• Other structures coverage, or Coverage B 
• Personal property coverage, or Coverage C
• Loss of use coverage, or Coverage D
• Personal liability, or Coverage E
• Medical payments coverage, or Coverage F

Below, we explain what each of these means and how much insurance is it recommended that you take out.

This coverage offers protection for the main structure on the property, including any attached structures. Any detached structures will be covered separately under Coverage B.

Homeowners insurance assists in paying for damages caused by covered perils to your home. To ensure adequate coverage, the Insurance Information Institute (III) advises homeowners to set policy limits high enough to cover the entire cost of rebuilding their homes.

The cost to rebuild your home may not be the same as its market value. When estimating the rebuilding cost, consider the following factors:

• Local construction costs: Multiply your home’s square footage by local per-square-foot building costs for a quick estimate.
• Improvements: Updates made to your home can increase its value and the rebuilding cost.
• Building codes: Ensure your policy covers rebuilding your home to comply with updated building codes.
• Material costs: Account for inflation that can impact rebuilding costs; consider adding an inflation guard clause to your policy.
• Special features: If your home has unique or hard-to-replace features, factor them into the rebuilding costs.

Any structure not directly connected to your home, such as a pool, shed, or barn, would fall under this part of the policy.

The cost of rebuilding these “other structures” is typically included in your dwelling coverage. Most policies provide coverage for detached structures at around 10 percent of the total insurance amount you have for the main house structure.

For example, if your home is insured for $250,000, the policy would offer $25,000 for repairs or rebuilding of any external structures.

This coverage protects the personal property owned or used by the residents of your home. Keep in mind that certain items, like cash, antiques, firearms, jewelry, furs, and electronics, may have limits set by the insurer. For example, jewelry coverage might be limited to under $2,000.

Typically, homeowners insurance provides coverage for personal belongings at 50 to 70 percent of the insurance on your home’s structure. However, this may not be sufficient. You can consider adding extra coverage for these items through an endorsement to your policy for a higher premium.

To accurately determine the value of your possessions, the III strongly recommends creating a home inventory. In case your personal property is stolen or damaged, this list will facilitate filing a claim.

While making the inventory, think about whether you want to insure the items for cash value or replacement cost. With cash value, the insurer might pay less for an older item, regardless of its original cost. With replacement cost, the insurer covers the cost to replace the item.

This part of the policy, also known as Additional Living Expense (ALE), covers extra costs you may face if damage to your home makes it uninhabitable.

Coverage is typically provided when law enforcement or civil authorities prevent you from using your residence due to damage to a neighboring home, provided that the damage is a covered peril.

Expenses covered include hotel bills, restaurant bills, and other costs incurred while your home is being rebuilt. It’s important to note that the insurer usually covers expenses that go “above and beyond normal expenses.”

For instance, it would apply to the additional cost of restaurant meals compared to your “normal” food expenses. However, it wouldn’t cover your regular mortgage, groceries, or utilities if they don’t exceed your usual expenses.

Many insurers offer coverage for about 20 percent of the insurance on your home, but this limit can vary depending on your insurer. You have the option to increase the coverage for an additional premium based on this limit.

This part of the policy protects you in case someone gets injured while at your home and files a claim or lawsuit against you.

For instance, if a guest slips and falls in your kitchen and sues, this coverage would pay for the claim and legal fees, up to the policy limits, if you are found legally liable. However, intentional harm caused by you or household members is not covered.

To safeguard your assets adequately, the Insurance Information Institute (III) recommends having enough liability coverage. Most policies offer a minimum of $100,000 worth of liability insurance, but the III suggests purchasing at least $300,000 to $500,000 worth of coverage.

If your net worth exceeds the liability limits in your policy due to property, investments, and savings, it might be prudent to consider a separate excess liability or umbrella policy. This additional policy can be helpful for homeowners with pets deemed “risky” by insurers.

Umbrella or excess liability policies kick in after you exhaust the liability policy limits, providing broader coverage. The cost of these policies depends on your existing insurance coverage and the level of risk you represent. Generally, the more liability coverage you have in your standard policy, the more affordable the umbrella or excess policy becomes. Most insurers require a minimum of $300,000 underlying liability insurance on your standard policy before issuing an excess policy.

This section of your policy covers medical expenses for people accidentally injured at your home, regardless of fault. It does not apply to your injuries or those of anyone else who lives with you.

The coverage limits are typically low because Coverage E may have additional components that pay for hospital expenses for injured guests, but only if you are found legally liable.

A deductible is the portion of an insurance claim that you, the insured, must pay. When a disaster damages your home and you file a claim for a specific amount, the deductible is subtracted, and your insurer covers the remaining cost.

For instance, if your policy has a $500 deductible and your insured loss is $10,000, you’ll receive a claims check for $9,500. The deductible amount is agreed upon when you purchase the insurance policy.

Homeowners insurance deductibles can either be a fixed amount or a percentage of your home’s insured value (dwelling coverage). If your home is insured for $100,000 and you have a 2 percent deductible, $2,000 would be deducted from any claim payment. Additionally, in Florida, there is a separate hurricane deductible that comes into play when a hurricane watch or warning is officially declared by the National Weather Service. Hurricane deductibles are typically higher than regular homeowner insurance deductibles.