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Insurance is something most people don't want to think about until they need it the most. But, understanding what is and is not covered in your homeowners insurance policy can mean the difference of being able to rebuild your home and replace your personal belongings. Homeowners need to do annual insurance policy "check ups" to make sure they keep up with local building costs, home remodeling and inventories of their personal belongings.
The typical homeowners insurance policy covers damage resulting from fire, windstorm, hail, water damage (excluding flooding), riots and explosion as well as other causes of loss, such as theft and the extra cost of living elsewhere while the structure is being repaired or rebuilt.
Your policy also covers your legal liability (up to policy limits) if you, members of your family or even your pets hurt other people or their property, not just in your house, but away from it as well.
For many people, their home is their largest asset, and obtaining a homeowners insurance policy is the most important step taken to protect it.
Q: Do I really need insurance for my home?
A: Yes. Insurance is your protection against the many property and liability risks you face as an owner or renter. For example, if somebody sued you for an injury or damage caused by you or your property, the cost of defending that suit could run into the thousands of dollars just for legal fees - regardless of the outcome of the suit. And if you were to lose your home due to a fire or to have the contents damaged or stolen, you probably could not afford to replace everything all at once. That's why mortgage lenders, as a rule, require homeowners insurance.
Q: What does a homeowners insurance policy cover?
A: With about 900 insurance companies writing property/casualty policies in the United States, individual homeowners policies vary. However, 80 percent of homeowners policies are based on a standard form, and all homeowners policies cover two important areas: property and liability. Moreover, your policy may cover you for additional living expenses should your home not be livable for a period of time due to a covered peril.
At a minimum, homeowners insurance usually covers damage caused by:
- Fire or lightning
- Windstorm or hail
- Explosions
- Aircraft
- Vehicles
- Smoke
- Theft or vandalism
- Falling objects
- Weight of ice, snow, or sleet
- Freezing of a plumbing, heating, air conditioning or other such household system
Q: Are the backyard shed and my television covered in my homeowners policy?
A: Yes. Real property and personal property are covered. The value of your real property - your home, garage, shed and other structures - is generally based on the value of the main structure, the house itself. So, if the house were insured for $100,000, other auxiliary structures would be covered for 10% of that, or $10,000 worth of damages.
Covered personal property includes the contents of your home and personal belongings used, owned, worn or carried by you or members of your household - basically, everything and the kitchen sink! This coverage is also based on the house coverage, and there are limits on the losses that can be claimed. Higher limits can be purchased for both real and personal property
Q: What about floods, earthquakes and other catastrophes?
A: Many homeowners policies cover damage caused by "just about anything" unless specifically excluded. Most catastrophes are covered. For example, wind damage from hurricanes or tornadoes is covered as a windstorm peril.
So, if the house were insured at $100,000, your insurance company will typically designate a percentage of that amount to cover those damages.
Call our licensed counselors anytime Monday - Friday 8:30am to 8:30pm for all of your insurance needs.
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