What Does Homeowners Insurance Cover?
Homeowners insurance can be somewhat confusing, with many homeowners uncertain about what is covered and is not covered by their policy. The better you understand the things this type of insurance does and does not cover, the better prepared you are to get the insurance protection that best meets your needs.
What Does Homeowners Insurance Cover?
There are some essential basics that most standard homeowners hazard insurance policies cover. These are the fundamental things your policy protects, and you’ll find very few policies that don’t offer, at least minimal coverage, for these inclusions.
- Your home’s structure. This means the house itself is covered from destruction or damage caused by covered events, such as wind, tornados, ice, hail, trees falling onto your home, fire, and vandalism.
- Personal possessions. These are the belongings you own. Depending on the type of insurance you have, they may be covered for actual cash value (the value after depreciation) or replacement value (how much it will cost to actually replace the item). Be prepared, as discussed below, high-value items may be extremely limited in the insurance protection provided for personal property without appropriate rider policies. Also, don’t forget about deductibles.
- Liability protection. Be warned, the liability protection included in a standard homeowner’s policy is often insufficient for appropriate risk management, but it’s a good start to protect you from claims made against you concerning damage to other people’s property, injuries occurring on your property, etc. You may still want to purchase additional liability protection.
- Other structures on your property. If you have outbuildings, such as detached garages, storage sheds, fences, etc., your homeowners insurance policy will cover those as well subject to covered events. It does not offer protection for trees damaged due to rot or disease.
- Additional or alternative living expenses. If the damage to your home is significant, your insurance policy will cover alternative living expenses while repairs are being made to your home or while you search for a new home or rebuild your existing home.
- Debris removal. Most home insurance policies also cover the costs of disposing of debris remaining in or of your home when covered events occur. This includes the disposal of some hard to dispose of items.
Of course, most policies will allow you to purchase additional coverage and insurance protection if your coverage is insufficient to meet your needs or keep you in your “risk” comfort zone.
What is Not Covered By Homeowners Insurance?
There are some things that most homeowners insurance policies strictly do not cover. Understanding these, seeking rider policies, and taking other measures can help you mitigate the financial fallout from these types of issues.
These are some of the common issues excluded by your homeowner’s policy.
- Floods and water damage. Many people don’t realize that their homeowners insurance policy doesn’t include flood protection. You’ll need to check with the National Flood Insurance Program (NFIP) or your private insurers to see about purchasing specific protection for flooding, which is more important than you might realize. You should note that the maximum coverage for structural damage covered by the NFIP is $250,000, and the maximum payment for your personal property is $100,000. If you need more protection, excess coverage is also available. Private market flood insurance policies may also offer another option to consider.
- Earthquakes, landslides, sinkholes, etc. A standard homeowners insurance policy does not cover these perils that move the earth, but you may purchase additional coverage with rider policies.
- Damaged resulting from poor maintenance. If you had a leaky roof that damaged your home, neither the damage to your home nor the leaky roof is covered by your homeowner’s insurance – unless the leak in your roof was caused by direct storm damage. If it’s an older roof and the damage was due to lack of maintenance, it will likely be excluded from coverage.
- Ordinance protection. This exclusion is extremely important and a bit tricky. Many communities have passed laws that homes requiring a certain percentage of repair must be brought completely up to code for things like wiring, flood-proofing, etc. A typical insurance policy will only cover the costs of meeting new code requirements in the areas damaged in the covered event, leaving you responsible for upgrading to code compliance for the remainder of your home – which can be a costly endeavor. Many standard policies often include a percentage of this coverage with higher limits often available.
Homeowners insurance is not a one-size-fits-all investment.
Work with a Generazio Associates, Inc. Insurance agent to get the homeowners insurance protection you need to protect your home and your investment in your home, safer from harm.