Insurance 101: Property Coverage Parts

Every property insurance policy is made up of two main parts: property and liability. We already know the difference between property and liability, or casualty, insurance coverage and we've already explored how property and liability apply to your automobile insurance. Let's take a look at how this coverage applies to your homeowner, renters, or condo policies.

The first part of your insurance policy is going to cover the property itself. Depending on the type of policy in question, which we'll delve into later, the property portion could have a few separate coverage parts. In the end, the insurance policy will be written on the basic, broad, or special form (discussed previously) and will cover damage to your home or contents.

The liability portion of your homeowner's insurance policy is a little different. You will always see a liability limit on one line and then a separate medical payment limit on another line. The liability limit on your insurance policy will range from $100,000 to $500,000 (generally in $100,000 increments). The medical payment limit on your insurance policy will range from $1,000 to $5,000.

Simply put, the medical payment limit is considered to be "good will" coverage. For example, if a friend comes to your home and falls over the crack in the sidewalk you haven't gotten around to fixing, you are liable, or responsible, for his accident. Your friend has to go to the hospital to have injuries attended to and you may or may not be asked to foot the bill. Let's be real, though - even your best friend can be swayed by a lawyer promising big bucks. The chances of a lawsuit in today's society are higher than ever before. The medical payment limit allows you to call your insurance company, explain the accident, and offer payment of their medical bills. We do this in the hopes that they will accept you took responsibility, paid the bill, and put the incident to rest. You do not have to be sued for your insurance company to pay under the medical payments portion.