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What Does Homeowners Insurance Cover?

Updated Nov 2, 2022

Updated Nov 2, 2022

Home > Home Insurance > What Does Homeowners Insurance Cover?

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Most homeowners know one thing about homeowners insurance, they need it. Outside of knowing that a homeowners insurance policy is important, most have no idea what is covered under the policy. Homeowners insurance typically has a mix of personal liability, dwelling coverage, and protection for your personal belongings. However, it’s not all that simple. There are some important things you must know about exclusions, additional coverage, and more. Our guide will show you exactly what homeowners insurance covers so you can become a more educated homeowner.

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What is Homeowners Insurance?

Homeowners insurance is a financial protection plan that can help in the time of a natural disaster, accident, or disaster that occurs. What a homeowners insurance policy covers will vary depending on the company you choose to protect the home and what coverages you have selected.

What is Covered by Homeowners Insurance

Regardless of the insurance company you choose, a homeowners insurance policy is broken into pieces that will include dwelling coverage, other structures, liability coverage, medical payments, personal property, and additional living expenses. Home insurance policies are not complete without all of these coverages in place.

Dwelling Protection

The dwelling protection will be the cost required to replace your home should something happen. Essentially if you experience a fire or major loss, the dwelling coverage is the cost to rebuild the home and allow you to live in it again.

In some areas, the dwelling coverage will match the value of your home, but it is usually not exact. For instance, you could live in a $500,000 home, but the dwelling coverage is $350,000.

This has a lot to do with the price of the property being factored in and the overall real estate market in your area. With dwelling protection, an insurance provider helps to determine what it costs to ultimately ensure the home and anything attached to it (garages and carports).

Protection of Other Structures

The other structures’ protection is typically a percentage of the dwelling coverage. This percentage can run from 10-20%, depending on the policy. With other structures protection your detached garage, sheds, and even driveway will be covered.

Some homeowners do not have much in the line of other structures, but it is a line item that some insurance agents won’t be able to remove from the policy.

Liability Coverage

Liability coverage helps to ensure that if someone gets hurt at your home, you won’t be personally liable. In addition, your homeowner’s insurance liability coverage can cover you should you do something at another home that causes a lawsuit. This liability coverage is usually going to be anywhere from $100,000-$500,000.

For those looking for more liability, a personal liability umbrella can typically be added to a homeowners insurance policy.

Medical Payments

If your uncle comes over to your home, trips, and falls and needs medical attention, medical payments can help to cover the costs. These coverage limits are typically considerably lower than others on the policy.

The coverage limits could be as low as $1,000 or $5,000 for medical bills. Large claims for medical expenses and related issues will go through the liability portion of your homeowner’s insurance policy.

Personal Property

Personal property coverage will take care of the things inside your home. If you are the victim of theft or vandalism and all of your electronics are stolen, the personal property coverage will kick in. With personal property, you can choose between actual cash value and replacement coverage.

The replacement coverage is more expensive as it will completely replace your belongings, regardless of how old they were or the condition they were in. Actual cash value gives you the money your belongings were worth when you lost them.

Personal property is typically a percentage of the dwelling coverage, but in some policies, this can be adjusted.

Additional Living Expenses (ALE)

Additional living expenses are designed to cover you should you experience a covered loss and need to evacuate your home. ALE can also be considered loss of use coverage. For those that experience something like a fire, you may not be able to live in your home for a year.

With additional living expenses, you can get your rent and sometimes even some of your food and living expenses paid for within the policy limits. Additional living expenses are part of a standard homeowner’s insurance policy that will be a percentage of the dwelling coverage.

Common Homeowners Insurance Claim Perils

Now that you have a general idea of what a homeowners insurance policy covers, let’s break these down to be more relevant to what you would use them for. Property damage is stressful, but what is even more stressful to find out that something you assumed was covered is not part of your plan.

Common IssuesAlways CoveredSometimes CoveredUsually Not Covered
RoofX
TermitesX
FloodX
Water LeaksX
TheftX
FiresX
PlumbingX
Tree RemovalX
Dog BitesX
HurricanesX
EarthquakesX
Fence DamageX
Identity TheftX

Mold

Mold is not covered under all insurance policies. However, if you had a pipe that burst behind the wall of your home and didn’t know it was leaking and it created a mold situation, chances are you will be covered.

Some people have mold in their homes because of a lack of maintenance or taking care of their homes. Lack of maintenance or neglect is not covered. In addition, you must ensure that the structure of your home is built in such a way as to help prevent mold from starting.

If you have specific mold questions, an insurance agent can help with your concerns.

Roof Damage and Replacement

Roof damage can happen during a fire or if a tree falls on your home. Home insurance companies will pay for your roof damage and replacement as long as it is not because of a lack of maintenance. Homeowners’ insurance companies will take a look at the roof and ensure that it still has life left in it before your experience your loss.

If it is found that the roof was not properly maintained it will likely not be a covered peril. Some roof leaks can be covered, but many homeowners get a home warranty policy with roof leak coverage.

Water Leaks

Water leaks are typically covered as part of your homeowner’s coverage. With water leaks, you will need to report this as a homeowners insurance claim as soon as possible. Getting the right people to fix the issue before it turns into a mold or personal property problem will help keep the cost of the claim down.

Some common areas for water leaks include the washing machine and kitchen appliances, and sinks.

Theft

Theft is a fundamental reason to have homeowners insurance in place. Theft is covered, but there will be limits on how much is covered. If you have high-end collectibles, artwork, or even fine jewelry, you may need to ensure you have an add-on policy for these things.

The limits can be reached rather quickly if you don’t have enough coverage. The last thing you will want to happen is experience a $25,000 loss with only $15,000 in coverage.

Take a home inventory so you know what you have. This way, if you ever experience a loss, you are prepared. In addition, when you get your home insurance quote, it will be much more accurate.

Fires

Fires are protected from insurance. The homeowner’s insurance policy will also cover you from smoke damage. The Insurance Information Institute has a lot of valuable information about fires and how this will impact insurance rates over time.

The fire coverage includes the cost to clean up after a fire as well as the replacement of the home after a fire. In addition, homeowners will sometimes have additional living expenses that help them pay for a place to live when the fire leaves them without a home for some time.

Plumbing Problems

Plumbing problems are not typically covered if you have a slow leak in your sink that you just ignore. However, issues with a burst pipe or something similar will be covered under the homeowner’s insurance policy.

The key here is to seek a solution for these plumbing problems as soon as possible.

Tree Removal

If a tree falls on your house, chances are the cost to remove and then rebuild the house will be covered. However, if it is found that the tree was diseased and that is why it fell on the home, you may have trouble with this being looked at as lacking maintenance.

It’s essential to look around your property and ensure that any trees that could fall on your home are strong and healthy.

Foundation Issues

Foundation issues are almost always covered by homeowners insurance. In addition, sometimes sinkholes will be additional coverage on the policy that help homeowners that run into these unfortunate situations. Foundation issues may also tap into the loss of use coverage options you see with fire and other damage.

Dog Bites

Dog bites are covered under your personal liability coverage. These will protect against bodily injury to your family members, friends, or guests in your home. Some homeowners insurance providers are strict about which types of dogs will be covered under the policy.

Make sure you talk to your insurance agent about this before you sign up for your plan.

Fence Damage

Fence damage is typically part of your structure’s coverage and will be included in a homeowners insurance policy. In addition to fences, things like driveways and unattached garages will also be considered part of the plan.

What is Typically Not Covered By Homeowners Insurance

Unfortunately, even with a high dwelling coverage limit, there are plenty of exclusions involved with every homeowner’s insurance policy. Certain valuable items or types of peril will be excluded depending on your provider. Here are some of the most important things to look out for as far as exclusions are concerned.

Natural Disasters: Floods, Earthquakes, Hurricanes

Natural disasters are not always covered under your homeowner’s insurance plan, but they can be. For instance, a policy in California will typically give you the option for earthquake insurance coverage. This part of the policy will likely have a different amount of coverage and a different deductible.

States like Florida and Georgia have homeowners insurance options, sometimes called windstorm coverage. This part of the policy will increase the total cost of the policy, and the deductible will often be entirely different.

For instance, you may have a $3,000 deductible for all other coverages but a $15,000 deductible for windstorm or hurricane damage. This coverage is not a concern in some areas of the country, but you know your location and what you will need.

Sewage Backups

Sewage backups are not typically part of the homeowner’s insurance policy; this includes issues with a sump pump. Again, a home warranty may be a better solution for things like this.

HVAC Systems and Large Appliances

HVAC systems and large appliances are not covered under a homeowners insurance policy if you are looking at the mechanical side of things. However, if a hurricane comes in and destroys your HVAC unit and you have hurricane coverage, it will typically be protected.

In addition, if your large appliances are damaged in a fire, they will be covered.

Pest Infestations

Termites and other pest infestations seem to be a big concern for many homeowners. However, these are typically not covered under a homeowners insurance policy. Instead, you can reach out to a local pest control business about their opportunities for a home pest warranty or bond.

Neglect

If you don’t take care of your home, you can’t expect your homeowner’s insurance company to cover it for you. Taking great care of your home will ensure that your dwelling and structure coverage is always paid out at the highest level.

Nuclear Hazards

Nuclear hazards are not covered under your homeowner’s insurance policy. However, if you live close to a nuclear plant the plant itself will have liability protection and liability insurance to protect you if there was an issue that impacted you in some way.

Power Outages

Power outages are not covered under a homeowners insurance policy. Power outages caused by storms that eventually lead to other damage can sometimes be considered if you have the proper storm and wind coverage as part of your plan. Damage related to power outages is a rare claim.

Identity Fraud

Identity fraud is an extra that many home insurance providers are starting to add. If you have someone steal your identity, open credit cards in your name, and even start their own bank accounts in your name, the insurance company may be able to help you get your money back.

With identifying fraud not being a standard coverage of your homeowner’s insurance policy, it’s essential to check in with your agent to see if this is included.

Expanding Homeowners Insurance Coverage

Homeowners’ insurance coverage often has separate policy options for high-value items, extra liability, and more. These may not be considered part of the standard plan, but they can sometimes help you save even more money on your policy.

Cash Value vs. Replacement Cost Policies

Replacement cost policies are more expensive than cash value policies. To understand the difference between these two policies, let’s look at something like a 48″ television you bought two years ago.

In a replacement cost policy, if something happened that caused you to lose the television, you would get a new 48″ television, just like the one you had.

In a cash value policy, the homeowner’s insurance company will look at how much that 48″ television would be worth today and give you that amount towards a new television.

As you can see, if you have a cash value plan, you will be paying quite a bit out of pocket to replace the lost things. The only good thing about the cash value policies is that they have a lower out-of-pocket cost throughout the year.

Homeowners Insurance Claim Payout Timeline

As frustrating as it can be, sometimes you must wait for your homeowner’s insurance claim to be accepted, filed, and then paid out. Waiting can leave you with part of your home that is not even functional. In addition, you will often have to pay quite a bit out of pocket only to be reimbursed later.

Times like these are when it is vital to keep good records and notes about your issues and save all receipts of any out-of-pocket expenses you may need to pay.

The insurance companies are regulated by the state you live in, and they will have a certain amount of time to acknowledge receipt of your claim and then deny or accept it. Most of the time they will have 10-30 days to acknowledge, followed by another 40-50 to do something about it.

Most homeowners will deal with this insurance claim for at least 90 days. The waiting period is one of the most frustrating parts of purchasing a homeowners insurance plan. When choosing the best company for you, look into the payout times for claims.

Final Thoughts: Is Homeowners Insurance Worth it?

Not only is homeowners insurance worth it, most of the time, but the lender you have used to purchase your home will also require it. Homeowners insurance protects us from things we don’t know are about to happen. Not having to worry about these things and getting to enjoy the life you have wanted in your home is important. Now it’s up to you to keep your home in excellent condition so that if something should come up, your insurance is going to cover it for you.

Start getting homeowner coverage by contacting the providers below for a free quote.

Frequently Asked Questions

What is the purpose of homeowners insurance?

The purpose of homeowners insurance is to provide financial protection against disasters and damage that occur to your home. Damages can include things like water leaks, fire, and theft.

Is there a difference between home insurance and homeowners insurance?

Homeowners insurance and home insurance are the same things; some companies will refer to them slightly differently.

What is a home insurance deductible?

The home insurance deductible is the amount of money you pay toward a claim before the insurance company starts paying. For instance, if you have a fire that caused $80,0000 in damage, but your deductible was $3,000, you would pay that $3,000, and your insurance company would pay the other $77,000. Deductibles are in place to discourage homeowners from filing too many small claims.

What is the average cost of home insurance?

The average cost for home insurance is $1,272. However, depending on where you live, the size of the home, and additional coverages you may add to the policy, this coverage can change. Home insurance companies have a wide range of discounts and savings plans to help make your insurance more affordable.

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