Why are there separate coverage types for your physical home and your belongings?

Since my belongings are all stored in my house, I don't understand the need for different coverage types.

There are separate coverage types for your dwelling and your personal property so that you can get the coverage that best suits your needs. The standard homeowners policy, also known as an HO3, will cover the dwelling and other structures (the house and things like sheds and garages) with open-peril coverage. This means it is covered for any loss except for whatever is excluded under the policy.
However, personal property inside the house is covered for named perils — those perils listed as covered under the policy — for actual cash value. Replacement cost coverage can be added by paying for an extra endorsement on the policy.
If you feel like your personal property has a higher-than-standard value, you may want to look into an HO5 policy. Both the HO3 and HO5 are very similar, but an HO5 provides open-peril coverage for your personal property and increased coverage limits for things like jewelry. Replacement cost for personal property also comes with this policy, but HO5 policies tend to be much more expensive and might not be the best financial choice for some people.
If you are unsure which is best for you and your home, talk with your insurance agent.
Shannon Martin
Answered on Apr 06, 2021
Shannon is an expert in personal lines liability insurance with 13 + years of insurance industry experience. She also served as a special insurance liaison to AARP members for 6 of those years. She is a graduate of UL Lafayette and currently resides in NY with her family. Shannon is also an amateur juggler, ukulele player, and is a time travel paradox theory enthusiast.

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