Before purchasing a policy, read the fine print on your insurance contract to learn what is and isn’t covered by home insurance.
Although each homeowners insurance policy is unique, practically all insurance policies share some coverages.
What Homeowners Insurance Covers
Homeowners insurance usually covers a wide range of potential problems.
Your physical home, as well as any other structures on the land, like a garage, fence, driveway, or shed, should be covered.
However, if you conduct a business in a separate structure on your property, it is normally not covered by homeowners insurance.
Personal property is usually covered under your coverage as well. Its specific protection is frequently referred to as contents insurance.
Coverage for certain high-value things, such as jewellery or artwork, may be limited; often, supplemental coverage is obtained particularly for such assets.
So, when you’re looking for a policy, don’t forget to ask your agent whether you’ll need additional coverage to protect your things.
Replacement Cost vs. Fair Value
Not all homeowners’ insurance coverage covers the replacement cost of their homes.
Purchasing replacement cost coverage helps to bridge the gap created by inflation and the loss of value when a property is no longer new.
If you do not claim a loss, the item in question will be assessed at its current fair market value when you file a claim.
Because some products degrade rapidly, you may not receive enough money from a claim to replace the items that were lost or destroyed.
Replacement-cost coverage assures that you can replace lost products with similar items. If having this coverage is vital to you, be sure both your home and personal property are insured.
Car Coverage
Personal effects and separate constructions on your property are often covered under most home insurance policies.
But what if your automobile is broken into when it is parked in your driveway or garage? This is where the line between your house and auto insurance plans can become hazy.
While homeowners insurance will not cover damage to the car itself, many policies will cover personal things stolen from it.
However, some more comprehensive auto insurance policies may cover this as well.
Insurance companies may also limit the coverage provided by your policy if the stolen items were acquired solely for use in the car.
Fire Coverage
House fires are one of the most prevalent sources of house damage, and practically every homeowner’s insurance policy covers structures and valuables from them.
Most typical fire plans cover the cost of additional living expenditures, such as hotel stays, rent, or food and restaurant bills, if a home is fully damaged by fire.
Natural Disaster Coverage
Your homeowner’s insurance policy should cover a wide spectrum of natural calamities, though not all of them.
Natural calamities that are commonly included include lightning, thunderstorms, hurricanes, and hail.
Your policy may also include coverage for smoke damage, falling items, and high winds.
Earthquakes and other natural earth movements are often not covered by insurance plans.
If you reside in a high-risk area for these or other sorts of natural disasters, make sure to inquire about special, separate types of catastrophe insurance, such as windstorm or flood insurance.
If your home is at risk of hurricane damage, you must have adequate insurance coverage in place to secure your property.
Your typical homeowner’s policy may not cover all storm damage, but you should consider purchasing a hurricane policy that does.
These policies frequently overlap with the coverage provided by your homeowner’s insurance.
Flood Coverage
Flooding caused by an internal issue, such as a leaking pipe or an overflowing toilet, is typically covered by home insurance.
Flooding caused by external factors, on the other hand, is very similar to earthquakes.
Natural (rising rivers, flash floods) or man-made (burst dams, sewer backups) causes are not normally covered by basic plans.
If you reside in a flood-prone area, you can ask your insurance carrier about adding flood coverage to your policy or (more likely) purchasing separate flood insurance.
In fact, if you need a mortgage, you may be forced to do so.
Vandalism Coverage
Unless specifically excluded, vandalism is normally covered under an all-risks or all-perils policy.
Vandalism coverage applies to vacant residences but not to homes that have been vacant for a specified period of time.
An unoccupied home is one that still retains the policy owner’s personal items despite the fact that the property owner is not present.
A vacant house is one that is unoccupied and devoid of the owner’s personal belongings.
As an example, suppose you sold your house and moved out, taking all of your goods and furnishings with you.
Vandalism coverage would be removed from your insurance after a certain amount of time.
Personal Injury
Most homeowners’ insurance policies cover injuries sustained on your property for which you are liable.
This may involve someone tripping on a patch of ice on your front walk or falling because of a damaged step on your porch.
This coverage is usually limited to a set cash amount, so you should know exactly how much coverage you have and what’s included.
If you believe you require additional liability coverage, umbrella insurance can supply it.
What Is a Homeowners Insurance Deductible?
The deductible is the amount that the insured must pay when filing a claim.
You can reduce your insurance rates by raising your deductible, which means you’ll have to pay more if you ever have an incident that necessitates a claim.
Keep in mind that many mortgage lenders demand homeowners to have a particular level of insurance on their property with a deductible that is less than a certain amount.
Before choosing the lowest available rate with the biggest possible deductible, consult with your mortgage provider.
It may be tempting to choose the lower rate, but if you ever need to make an insurance claim, you may find yourself with a $10,000 deductible.
Final Thoughts
The fine print in your insurance policy may not appear to be particularly interesting reading, but it’s better to take the time to thoroughly understand what your insurance policy covers—before you’re stuck in an unfortunate situation and discover you’re not covered for that specific loss or liability.
In the end, conducting your research before obtaining a policy might truly pay off when you need to rely on your home’s insurance coverage.
