Homeowner’s insurance can protect your family from unforeseen disasters, but what does home insurance cover?
Homeowners insurance is a type of property insurance that covers losses to a home and its contents. Home insurance is not a one size fits all solution for every single home and coverage situation. Insurance coverage varies based on the insurance company, the size of your home, the area you live in, and the type of plan you purchase.
Still, there are some hard and fast rules for what homeowner insurance covers and does not cover. Some events fall under the “covered loss” event at all times. Insurance companies cover your expenses up to your policy’s limits for covered losses. Some losses are only covered under certain conditions, or if you purchase a specific type of supplemental insurance.
Homeowners’ insurance coverage may not include other losses that you’d expect. These distinctions may seem odd at first and maybe confusing at times. You must understand what homeowners insurance coverage includes vs what you might have to pay out of pocket for. There are extra layers in home insurance coverage.
Read on to find out the answer to “what does home insurance cover?”
Home Insurance Coverage
Homeowners’ insurance coverage does not always cover what you may expect.
Home insurance coverage will vary depending on the specific policy type, policy limits, the insurance company, and the state in which the home is located. Unexpected exceptions require an additional cost for coverage.
However, typical home insurance policies generally provide coverage for damage to the home and its contents, liability in the event of an accident, and extra cost for medical payments in the event of an injury. While every policy has different inclusions and fine print, some universal events fall under coverage.
Structures Coverage
Structures coverage, also known as dwelling coverage, is the protection against damaged or destroyed property. If part of your home’s foundation or structure is damaged, you will likely be completely covered. You will not be required to pay for repair it in most circumstances.
The maximum that you should have on your house insurance should be equal to your home’s replacement cost, or to the cost to completely rebuild your house, based on the cost of construction and labor. This is called
a dwelling coverage limit.
Some disasters may destroy your entire home or building you own. Structures coverage will allow you to rebuild or repair your home using your insurance up to whatever your coverage limits are. Also, structure coverage includes additional living expenses, like hotel stays.
Structures coverage includes other existing structures on your property unattached to your home. For example, this includes a shed, detached garage, driveway, fence, and other structures. In case of damage to any of your property, your insurance will pay for the products and services required for repair. You don’t need to pay for additional coverage if you already have this insurance.
Homeowners insurance cover:
Coverage for Belongings
Homeowner’s insurance covers most personal belongings. This includes everything inside your home, like furniture, technological devices, art, jewelry, and, credit card. Determine and dictate the value of any valuable items to ensure protection. However, valuable exceeding a certain amount may require special coverage.
Unexpectedly, coverage may include credit card theft and identity theft.
Stolen credit cards coverage is up to $500, usually. If someone breaks into your apartment and steals it, the cost of protection will only cover the difference between them. You may add on identity theft coverage in some cases.
Liability Coverage
Personal liability is when accidents happen in your home, at other people’s homes, or to other people’s belongings. Homeowner’s insurance covers a wide range of happenings, given that it is accidental, and the insured party is responsible. Coverage will not include an uninsured person damaging your property.
It also pays for legal costs if you are sued. The amount of coverage you have will depend on the policy limits, policy form, and the type of liability coverage you choose.
However, liability coverage will cover you for a wide range of property damage, injuries, and accidents. Someone who sustains injury in your house can submit medical bills to your home insurance company.
Damage to Real Property
Your home is the building that you live in. The homeowners insurance that you buy will cover the cost of repairing or replacing the walls of your dwelling.
Disasters covered by Homeowners Insurance
An explosion that happens in a riot or civil commotion can be covered by this homeowners insurance.
Not Covered by Homeowners Insurance
It is important to know the homeowners policy for your homeowners insurance. Here is some policies about what kind of circumstances are not covered:
Accidents in Cars
As mentioned above, most plans include coverage for a wide range of personal liability cases. Personal liability cases include when somebody else sustains injury in your home or vice versa. However, liability coverage does not include accidents in cars (because car insurance would).
Most homeowners insurance plans do not cover anything that happens in or involves automobiles, like car accidents, medical expenses needed because of them, or other accidents that happen on the road.
Most homeowners insurance plans and homeowners insurance policies DO include coverage for theft of belongings that happens when your car is on your property. But it will not cover the damage that happens to the car.
Certain Natural Disasters
Most home insurance policies cover several natural disasters that may damage your home. For example, policies often cover events like wildfires, thunderstorms, volcanic eruptions, nuclear hazards, and other random natural disasters.
However, coverage may not include damage from earthquakes, floods, or even hurricanes. Since earthquakes do not affect most areas, most plans do not cover them.
Basic Earthquake insurance from the California Earthquake Authority (CEA) explains about how you can file a claim and the loss is covered, your insurer will pay out for claims as long as you meet your policy deductible.
Note that you can purchase special coverage if earthquakes commonly occur in your area.
Flood damage is an interesting example. Coverage handles flooding originating from the inside of your home (leaking pipes, toilet overflow, water damage) but not flooding originating from the outside of the home. As melting snow comes into the home, it will be covered under a separate flood insurance policy. Oftentimes, you can purchase separate flood insurance.
Hurricane coverage is perhaps the most tricky because limited amounts of damage are covered. It is an add-on typically purchased by those living in coastal areas that specifically covers hurricane damage. Always make sure to know the standard policy provided by insurance agents in your area.
Paying Off the Mortgage
Paying off your mortgage can provide certain financial benefits, such as freeing up more money each month to use for other purposes, and building equity in your home.
In the case of death or extenuating financial circumstances, most home insurance policies do not cover unpaid mortgages. In this scenario, you will most likely need mortgage life insurance. Mortgage life insurance covers the lender and ensures relatives do not have to pay off the mortgage.
Know Your Coverage Level
At the end of the day, you must know what is covered and what is not. Home insurance covers a lot of things, but there are always exceptions and individual needs that might need special consideration. Always carefully consider your coverage options and try to know what’s in the fine print. Make sure to get a home insurance quote and know the insurance coverage limit before agreeing to any policy.
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