Whether you’re buying your first home or reviewing your current coverage, understanding your homeowners insurance policy is key to making confident, informed decisions. A home policy protects your structure, personal belongings, and offers personal liability protection — all in one.

Let’s break down the essentials of what your policy includes — and what it means for you.

Coverage A – Dwelling Protection

Coverage A protects the structure of your home: the walls, roof, and any permanently attached features like your garage, or deck.

If your home is damaged or destroyed by a covered peril — such as fire, wind, or hail — this part of your policy helps pay to rebuild or repair.

Tip: Your dwelling limit should equal the cost to rebuild your home,, not the market value.

Coverage B – Personal Property

Coverage B protects the contents of your home— from your furniture, clothing, and kitchenware to TVs, tools, and tech.

You’re covered against risks like: - Fire or smoke - Theft or vandalism - Water damage from burst pipes

Depending on your policy, your payout will be based on one of two methods: Actual Cash Value (ACV) or Replacement Cost Value (RCV) — explained in detail below.

Understanding Your Deductibles

A deductible is the amount you pay out of pocket before your insurance begins to cover a claim. Your policy includes two separate deductiblestwo separate deductibles, depending on the cause of loss:

Deductible 1: Windstorm, Hurricane, and Hail

• Applies to storms, hurricanes, hail, and high wind events.
• Typically a percentage of your dwelling coverage (e.g., 1%–5%)

Deductible 2: All Other Perils (AOP)

• Applies to losses like fire, theft, or water damage
• Typically a percentage of your dwelling coverage (e.g., 1%–5%)

Tip: Review your deductible levels annually to make sure they match your risk tolerance and budget.

Replacement Cost vs Actual Cash Value: What’s the Difference?

When you file a claim for damage or loss, the type of coverage you have determines how much money you receive.

Replacement Cost Value (RCV)

This covers the full cost to replace damaged items or property with new, similar items — without subtracting for depreciation.

• Example: Your 8-year-old TV is stolen. You bought it for $900. The cost to buy a new one today is $1,200.
• If you have replacement cost coverage, your insurer will reimburse you the full $1,200, once you replace the item and provide proof of purchase.

Best for: Homeowners who want to be fully reimbursed for rebuilding or replacing lost items.

Note: Replacement cost is often paid in two steps:

1. You receive the Actual Cash Value less deductible first.

2. Once you show proof of replacement, the recoverable depreciation subject to the policy terms is paid out.

Actual Cash Value (ACV)

This method reimburses you for the depreciated value of your damaged or stolen property — factoring in age, wear and tear, and market value.

• Using the same example: The 8-year-old TV may have a depreciated value of $200.
• With ACV coverage, your insurer pays you $200 your insurer will reimburse you the full $1,200,, and you cover the rest if you want to buy a new one.

Best for: Lower-cost policies, but with reduced payouts in the event of a loss.

Final Thoughts

Knowing the difference between replacement cost and actual cash value can dramatically affect how much you recover after a loss. It’s one of the most important choices you make when setting up your policy.

When reviewing your home insurance: - Understand what’s covered under Coverage A and B.

• - Know your deductibles and when they apply
• - Confirm whether you have replacement cost or ACV — and what steps are required to receive full reimbursement

Peace of mind begins with clarity. Start with a policy that’s built to protect you fully.

Disclaimer: The information provided on this page is for informational purposes only and may not reflect the specific terms and coverage of your insurance policy. This content does not constitute a waiver of any policy terms, conditions, or exclusions. Your actual insurance policy is the controlling document and will govern in the event of any differences or claims.