Is there any difference between homeowners insurance and dwelling insurance?

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Asked June 4, 2012

1 Answer

A basic homeowner's insurance policy includes 4 basic types of coverage. The dwelling and other structure are insured, along with your personal property, liability for damages or injuries, and reimbursement of out of pocket expenses if you are unable to use all or part of your property. Since personal property and loss of use expenses are not necessary when the home is being rented, there is a basic policy available to fit just that situation.

Dwelling insurance will cover the dwelling and other structures on the insured real estate, but it does include the coverages a tenant would purchase through a renters insurance policy. Personal property and personal injury and damage liability are left out of the policy, allowing the homeowner to have the buildings insured at a much lower cost than full homeowners insurance would cost them.

Keep in mind that if you or your family live in the home, dwelling insurance may not be sufficient for all purposes. Unless the occupants of the home furnish their own personal property and liability coverages, it might be less expensive to use a complete home insurance package than to purchases coverages separately. Dwelling insurance is not suitable if you have an insurable interest in the people living in the home, because most dwelling coverage is merely a stripped home policy, not a different type of policy.

Finally, a policy which pays for full replacement will cost more than a policy that pays actual cash value. The difference is that full replacement will pay for the repairs regardless of the cost, but actual cash value will only pay the depreciated value of the home.

Answered June 4, 2012 by Anonymous

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