Homeowners Policy Limits

A homeowners policy limits are the maximum amounts that an insurer will pay as financial compensation for loss, damages, or injury related to the insured property. Homeowners insurance protects the homeowner from possible financial losses as a result of damage, loss, or injury related to the property. The property would include the dwelling and other structures such as garages, swimming pools. It would also pertain to the contents of the buildings, things such as jewelry, clothing, furniture, works of art, electrical equipment, appliances, silverware, books, and other personal possessions, providing that at least one of the persons named on the policy actually lives on the property.

Types of HOI Policies

Homeowners insurance policies are referred to in the industry as HOI, the different types having a number attached that indicates the extent of its clauses. There are HO-1, HO-2, HO-3, and so on. HO-1, HO-2, and HO-3 are the most commonly used forms and cover a wide range of perils, risks, and hazards. Homeowners may obtain modifications and adjustments to the standardized forms, to accommodate extraordinary circumstances, but in general, the forms contain he same clauses. For example, a "standard form" or most basic homeowners insurance generally provides coverage against about eleven stated perils. These include fire, lightning, wind damage, and hail. It also includes riots, explosions, or civil commotion, damage from aircraft, smoke, and motor vehicles, as well as theft, burglary, and vandalism or malicious mischief. Freezing of plumbing, heating or air conditioning, or damage to property form exploding water heater is covered here. Damage and injury from falling objects are covered, as is damage from the weight of ice, snow or sleet making the roof cave in, for instance.

Generally, the value of the property is estimated and the homeowner decides whether the value insured will be the actual cash value or the replacement value. The insurance carrier will attach an upper limit, a maximum amount of the value of the property up to which it will provide coverage. That is to say, that if the house is insured for three hundred thousand dollars, the insurer will cover damages or loss up to that limit, minus the deductible that the policyholder agrees to pay.  A large part of choosing the right carrier is finding one who offers the limit that meets your needs.

Other Structures

The homeowners insurance policy also covers other buildings on the property, referred to as other structures. The coverage limits on these are always a percentage of the value of the dwelling. So that, if the property that is valued at three hundred thousand dollars has a hobby shed on the grounds, the hobby shed will be covered for perhaps ten percent of three hundred thousand, and therefore, thirty thousand dollars. The insurance carrier will pay only a maximum of thirty thousand dollars for any damage to the shed.

Liability Coverage

Separate homeowners policy limits apply to injuries to persons on the property. These also are generally assessed as a percentage of the value of the property, but due to the extraordinary nature of personal injury claims, the ratio can vary substantially. Depending on the type of activities that might occur at the house, depending upon whether teenagers or perhaps senior citizens live on the property, personal liability limits could vary.

If, for example, there were a swimming pool on the property, the liability limit would likely be higher than otherwise, because swimming pools present a serious liability. If there were teenagers in the family it could increase even further. The insurer and homeowner would be wise to take into account the visits of other teenagers not members of the family. However, that limit might be lower if the resident were a senior living alone.

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