What, exactly, does homeowner’s insurance cover? Are you safe from any damage to your home or are you only covered against a few things? These common questions have occurred to many homeowners. Let’s go over some of the basics you need to know about homeowner’s insurance.
Not a Luxury
Unlike some forms of insurance that are considered luxuries, you need to have homeowner’s insurance. Most mortgage companies require some kind of coverage for the value of your property, given that they’re lending you money for the thing. Of course, it would still be a good idea to have insurance even if you didn’t have a mortgage.
Some Standard Elements
Like most insurance policies, you’re able to customize your homeowner’s insurance to fine-tune it to your exact specifications. Still, there are some standard elements that appear in the majority of homeowner’s insurance policies. Here are a handful of things you can expect homeowner’s insurance to cover.
Damage to Your Home
Damage to the inside or outside of your home due to lightning, strong winds, storms, fires, or even from malicious vandalism, is usually covered. Some disasters, like floods and earthquakes, aren’t automatically included in this, though. If you want protection from those types of disasters, it’s usually an extra rider on your policy.
Damage to Your Belongings
This usually also covers your belongings in your home, including appliances, clothes, furniture, and electronics. The most common case in which homeowner’s insurance kicks in to cover these items is in the event of a fire, though other disasters or even theft can trigger it.
Possession Coverage Limits
Notably, the coverage for your possessions is usually between 50% and 70% of the coverage for your home’s structure. If you need more than that for extremely pricey items like antique furniture, collectibles, or memorabilia, you’ll need to add extra riders to your policy.
Liability Coverage
Picture this: you invite an acquaintance over to your home and they slip while climbing the steps to your porch. They break their tailbone and decide that it’s your fault for inviting them over to an unsafe home and sue you. What do you do? Well, if you have homeowner’s insurance, your policy can kick in and help you cover the legal costs of such a lawsuit.
Pet Liability
It’s important to remember that liability insurance also covers your pets. For instance, if your dog bites someone, your insurance will pay out their medical bills. You can even add off-premises liability coverage to your policy, which covers things like damage done to property when you’re visiting someone else’s home. Experts suggest getting a policy that has at least $300,000 worth of liability coverage.
Hotel Stay
If your home burns down, your homeowner’s insurance could put you up in a hotel while a new one is built. This is covered under a clause called “additional living expenses,” and it’s rarely used. Still, if you find yourself homeless due to disaster, you’ll be extremely glad to have an additional living expenses clause on your policy while you kick back in a comfortable hotel room and wait for you new place to get built.
Common Exceptions
There are a few events that are rarely covered by standard policies. These include things damage from sewer or drain backups, damage caused by pests or mold, and extensive or gradual damage from sinkholes. Also, while uncommon, acts of war, terrorism, or civil unrest aren’t typically covered, nor is damage from nuclear accidents. As per usual, most of these can be included as riders on a policy.
Renter’s Insurance?
There’s a similar type of insurance that tenants of rental properties can get that’s, simply enough, called renter’s insurance. Some landlords even require their tenants to have renter’s insurance as a way to protect their belongings in case of theft or damage. Still, even if it’s not required, you should consider getting renter’s insurance if you live in an apartment or rental property.
Read More: 10 Ways to Know When to Refinance Your Home
