A homeowner insurance policy is designed to protect homeowners against certain disasters such as fire, lightening, and internal explosions. The standard insurance policies do not cover perils such as damage caused by earthquakes and floods. You need to buy separate policies for them. A standard policy is basically divided into two parts: property protection and liability protection. The property protection is further divided into more categories. These include dwelling, other structures, personal property and loss of use.

Dwelling: This section of the policy covers areas such as the house and also the structures and built in appliances including plumbing, heating, permanently installed air condition systems and the electrical fittings.

Other Structures: Garages, fences, sheds, driveways, and sidewalks fall under this category.

Personal Property: Basically, your personal belongings such as jewelry, sports equipment, entertainment equipment, and furniture fall under this category. The policy covers your off-premises belongings, but it does not cover any off-premises equipment used for business purposes. The policy will cover business equipment if the business is run from home. You must keep in mind that the policy will pay for the cost of the equipment damaged, after calculating its depreciation costs. It is also important to point out that the combined coverage for jewelry, furs and other related items is only $10,000. The reason behind this is to encourage people to opt for additional coverage for these expensive items.

Loss of use: There may be circumstances when you are unable to live in your house because of repairs that have to be carried out due to damages. The policy will cover all your expenses that are over and above the ones required for normal living.

The other major division of the homeowner insurance policy is the liability protection it offers to the policyholder and to his or her family members. This is also divided into two parts. First is the protection that the policy provides in case of lawsuits against the policyholders for bodily injury or damage to property caused accidentally. The other is the medical liability protection cover given to people who are accidentally injured on the policyholder\'s property.