What Does Homeowners Insurance Cover?
A home is an expensive investment that needs protection. With good care, your home could end up being worth significantly more than you paid. One of the best ways to help protect your home is with a good homeowners insurance policy. If you would like to know more about what is covered under typical homeowners insurance policies, keep reading.
1. The Dwelling
Homeowners insurance covers the home under many circumstances, including fire, windstorms, theft, vandalism, falling objects, damage from aircraft, and explosions. Under most standard policies, however, floods and earthquakes are not covered. If you need flood or earthquake insurance, you may need to choose a peril-specific policy over an all-risk policy.
In addition, homeowners insurance does not cover damage from a lack of maintenance. Part of regular maintenance is upgrading and replacing parts of the home. For example, if your roof starts leaking due to lack of maintenance or you need to replace the roof, that is your responsibility. If a tree branch caused a hole in your new roof, however, that damage is likely covered, depending on your policy.
2. Stand-Alone Structures
Besides the home, you may have other structures on your property, such as a detached garage, shed, barn, fences, gazebos, guesthouses, or in-ground pools. In most cases, standard homeowners insurance covers these detached structures, but you should always look through your policy to verify what is and is not covered.
In many cases, the insurance provider puts a limit on how much of your dwelling coverage you can use on stand-alone structures. Therefore, if your dwelling coverage is $300,000, but your stand-alone structure limit is 10 percent (industry standard), the policy will only cover up to $30,000 of damages for stand-alone structures. If the damages exceed $30,000, you will have to pay the rest out of pocket.
3. Personal Property
Homeowners insurance also covers the personal property inside the home. Insurance carriers will offer one of two options: replacement cost coverage or actual cash value coverage. Replacement cost coverage provides enough money to buy a new version of the damaged items. Actual cash value coverage provides enough cash to pay for the current market value of the property.
Actual cash value coverage is cheaper because it pays less. For example, did you purchased a TV for $900 five years ago and it gets damaged in a covered disaster? If you purchased replacement cost coverage, you'll get enough money to buy a brand-new item. If you purchased actual cash value, however, you will not get the $900 you paid for the TV; you will get the value of the TV if you sold it today.
4. Liability Claims
A typical homeowners insurance policy will include liability coverage, which is incredibly important if someone is injured while on your property. Liability coverage usually pays for medical bills, pain and suffering, lost wages, death benefit, and legal costs.
There are a few times when you will not have coverage if someone is injured. If you purposely hurt someone, your insurance probably will not cover the expenses. Also, if you run a business in your home, and the injury is related to the business, homeowners insurance may not be enough. Instead, you should consider adding a home business policy.
If you own a home, you need homeowners insurance to protect your investment. Not only will it provide money if the dwelling is damaged, but it helps pay for medical and court expenses if someone is hurt on your property. For more information or if you would like to get a quote for a policy, contact us at The Policy Center Inc. today.
