If you haven't looked at your policy lately, set some time aside for a quick review – and be proactive about the questions you don't want to ask for the first time after a loss.

Some questions to ask are at the bottom of this post.

How to interpret the key sections (the "Coverage A/B/C/D" part)

Coverage A – Dwelling

This is the amount your insurer will pay to repair or rebuild the structure of your home. It's usually based on replacement cost (what it would cost to rebuild today), not what you think your home would sell for.

This is one of the most important numbers in the entire policy. If it's too low, you can end up underinsured even if you've paid premiums faithfully for years.

Key question: If rebuilding costs jumped 20–30% after a major event, would this number still be enough?

Coverage B – Other Structures

Detached structures on your property: garage, shed, fence, pool house, pergola, etc. This is often set as a percentage of Coverage A (commonly around 10%, but it varies). If you've added an ADU, built a major backyard structure, or installed high-end hardscaping, this line item can become inadequate.

Coverage C – Personal Property Your contents: furniture, clothing, electronics, appliances, and everything inside the home. Most policies set this as a percentage of Coverage A (often 50–70%).

This is also where people discover "limits within the limit." For example, there are often caps on jewelry, watches, art, firearms, collectibles, and business equipment. If you own high-value items, they may need to be scheduled separately with appraisals to be fully covered.

Coverage D – Loss of Use / Additional Living Expenses (ALE)

Pays for extra costs if you can't live in your home during repairs – temporary housing, increased meal costs, storage, etc.

In a widespread disaster this line item matters more than most people realize. Rebuild timelines can stretch for months or even years.

ALE coverage is often capped either by a dollar limit, a time limit (e.g., 12–24 months), or both – so it's important to know exactly how yours works.

Personal Liability

If someone is injured on your property – or you're sued – this is the primary layer of protection. For high-net-worth households, this is almost always a "review immediately" item and is typically paired with a personal umbrella policy for additional protection.

Deductibles – Read the Fine Print

Don't just look at the number. Look at how it applies.

Often policies have a standard dollar deductible for everyday claims, separate deductibles for specific perils (wind, hail, hurricane, earthquake, etc.), and percentage deductibles based on Coverage A instead of flat amounts.

For example, a 10% earthquake deductible on a $1,500,000 home is $150,000 before coverage kicks in.

Common Coverage Gaps

Certain perils are often excluded from standard homeowners policies, depending on where you live:

  • Flood – almost always requires a separate policy
  • Earthquake – typically excluded
  • Sewer or water backup – usually an add-on endorsement
  • Landslide, mudslide, or earth movement (different from earthquake) – typically excluded unless covered by a separate endorsement
  • Hurricane or windstorm – may require a separate policy or carry a special deductible in coastal states

What's "standard" in one state may be a special endorsement in another. Geography matters.

Questions worth asking your insurer (ideally, before something happens)

  • How did you calculate my replacement cost for Coverage A?
  • Do I have extended or guaranteed replacement cost if rebuild costs spike?
  • Are renovations, ADUs, or major upgrades reflected in Coverage A and B?
  • Am I covered at replacement cost or actual cash value for personal property?
  • Do I need to schedule valuables like jewelry, art, or collectibles?
  • What deductibles apply to the scenarios I'm most exposed to?
  • Are flood, earthquake, sewer backup, or windstorm covered—or separate?
  • Should I increase liability limits or add an umbrella policy?

This is one of those tasks that's easy to put off, but a thoughtful 30-minute review now can help prevent a painful, expensive surprise later.

For educational purposes only. Not tax, legal, or investment advice.