Homeowners Insurance Limits: 4 Reasons To Read the Fine Print

A policy limit on your homeowners insurance coverage is the maximum amount of money you can get on a claim. But all limits aren’t the same, so it’s important to pay attention to them and avoid unwelcome surprises. These are the four types of policy limits.

1.     Dwelling limit

This is the maximum that will be paid when a damaged home is declared a total loss. It also covers structures that are attached to your home, such as a garage, front porch or deck. It’s a good idea to work with your agent to determine the home’s replacement cost, which is what it would take to rebuild the house, to ensure you have adequate coverage. (Read more about hurricane damage and roof damage.)

2. Sublimits

These are the maximum amounts that will be paid on specific kinds of possessions, such as jewelry, business equipment and freestanding structures on your property. If you own property of this type that’s worth more than the sublimit that covers it, talk to your agent about adding an endorsement to your policy to increase the coverage.

3. Liability limit

If you’re held responsible for another person’s property damage or bodily injury—for example, if a tree limb from your yard falls on a neighbor’s car or your dog bites someone—this is the maximum amount that your policy will pay.

For additional coverage above the liability limit, consider buying a personal liability umbrella policy.  Read more about the benefits of umbrella policies.

4. Time limits

These are conditions listed in a policy that must be met in order to receive full coverage. They can, for example, specify the amount of time you have for paying your insurance premium or reporting a loss.

For answers to any questions you may have, and to adjust coverage, schedule a policy review with your agent.