A tree crashes through your roof during a summer storm. A kitchen fire spreads before you can extinguish it. Someone slips on your icy front steps and breaks their wrist. Your neighbor’s teenager accidentally throws a baseball through your window.
In each scenario, you face unexpected costs, potentially thousands of dollars. Whether those costs drain your savings or get covered by insurance depends entirely on understanding what home insurance typically covers before disaster strikes.
Most Minnesota homeowners purchase policies without fully grasping what protection they’re buying, only discovering gaps when filing a claim. Let’s change that.
Dwelling Coverage: What Your Home Insurance Pays to Repair
Your home’s structure represents the core support of your policy. Dwelling support pays to repair or rebuild your house if damage occurs from covered events.
This includes:
- Walls, roof, and foundation
- Attached structures like garages
- Built-in appliances
- Plumbing, electrical, and heating systems
Now that you know what dwelling coverage protects, here’s what determines how much you receive. Policies typically cover damage from fire, lightning, wind, hail, and certain types of water damage. The limit should reflect your home’s rebuilding cost, not its market value or what you paid for it.
Other Structures Coverage: Sheds, Fences, and Detached Garages
Detached structures on your property get separate protection under most policies. This coverage extends to:
- Detached garages or sheds
- Fences
- Driveways and walkways
- Swimming pools
Limits for other structures usually equal 10% of your dwelling coverage. For example, if your home is insured for $300,000, you’d have $30,000 for other structures. If you own expensive outbuildings, discuss increasing this limit with your agent.
How Home Insurance Protects Your Belongings
Personal property insurance protects your possessions inside your home and often extends to items you take with you.
Here we are going to explain what this means for your everyday belongings:
- Furniture and electronics
- Clothing and jewelry
- Appliances and kitchenware
- Tools and sporting equipment
Standard policies typically cover personal property at 50-70% of your dwelling cover. A $300,000 policy would include $150,000-$210,000 for belongings.
Important limitations exist for certain items. Jewelry, art, collectibles, and cash often have sub-limits, sometimes as low as $1,000-$2,500 total. If you own valuable items, consider adding scheduled personal property coverage or floaters that provide higher limits and broader protection.
Liability Protection: When Accidents Happen
Liability coverage protects you when someone gets injured on your property or you accidentally damage their property. This plan extends beyond your home to incidents involving you or your family members anywhere in the world.
What Liability Covers
Your policy typically includes:
- Medical bills for injured guests
- Legal defense costs if you’re sued
- Settlements or judgments against you
- Damage you cause to others’ property
Standard plans offer $100,000-$300,000 in liability insurance. For many families, this isn’t enough. A serious injury or lawsuit can easily exceed these limits, putting your savings, income, and assets at risk.
To learn more about protecting yourself from catastrophic liability, ask your agent about umbrella policies. These provide $1 million or more in additional coverage at surprisingly affordable rates.
Medical Payments Coverage for Guest Injuries
Medical payments coverage pays for minor injuries to guests on your property, regardless of who’s at fault. It’s a goodwill feature that handles small medical bills without involving liability or lawsuits.
Typical limits range from $1,000-$5,000. If a friend trips on your stairs and needs emergency room treatment, medical payments coverage handles the bill quickly without determining fault or filing a claim under your liability plan.
Loss of Use Coverage: Paying for Temporary Housing
When covered damage makes your home unlivable, loss of use protection pays for temporary housing and additional expenses while repairs happen.
This includes:
- Hotel or rental housing costs
- Restaurant meals if you can’t use your kitchen
- Storage for belongings during repairs
- Pet boarding if temporary housing doesn’t allow animals
This typically equals 20% of your dwelling limit and pays the difference between your normal living expenses and what you spend temporarily. If you usually spend $500 monthly on groceries and housing, but temporary living costs $2,000, your policy covers the $1,500 difference.
What Home Insurance Usually Does Not Cover
Understanding exclusions prevents unpleasant surprises when filing claims.
Common Exclusions Include:
- Floods and earthquakes (require separate policies)
- Normal wear and tear
- Maintenance issues like roof leaks from age
- Damage from pests or rodents
- Intentional damage
- Home-based business property and liability
Some exclusions can be addressed with endorsements. Water backup protects against sewer and drain issues. Equipment breakdown plans extend to mechanical systems and appliances.
Optional Home Insurance Add-Ons to Consider
Standard policies provide solid protection, but your situation might benefit from additional insurance.
Worth Considering:
- Scheduled personal property for valuable items
- Water backup cover
- Home business endorsements
- Identity theft protection
- Ordinance and law coverage for code upgrades during rebuilding
Each endorsement adds cost but also provides specific safeguards standard policies exclude.
Replacement Cost vs. Actual Cash Value
How your policy calculates payments significantly affects what you receive after a loss.
- Replacement cost: Pays to replace damaged items with new ones of similar quality. A five-year-old couch would be covered at the cost of a new equivalent.
- Actual cash value: Subtracts depreciation from the payout. That same couch might only be covered at about 60% of its replacement cost.
Most plans offer replacement cost for dwellings and actual cash value for personal property unless you specifically select replacement cost coverage. The premium difference is modest compared to the benefit when filing claims.
How to Choose the Right Home Insurance Limits
Home insurance policies share common structures, but coverage limits and options should reflect your specific situation. A $200,000 home needs different limits than a $500,000 property. Families with expensive jewelry, art, or collectibles need different plans than those with modest possessions.
Regular reviews ensure your coverage keeps pace with home values, renovations, and life changes. That kitchen remodel increased your home’s value; does your dwelling cover reflect it? Those new appliances and furniture represent additional personal property needing protection.
Review Your Home Insurance With a Local Agent
MBA Insurance Services helps families across Red Wing, Lake City, Ellsworth, and Lutsen make sense of home insurance. Our team provides straightforward explanations in plain language, coverage reviews tailored to your situation, and access to multiple insurance carriers.
Review your home insurance plan with our experienced team. Contact MBA Insurance Services to ensure your policy provides the protection your home and family deserve.
