What Does My Homeowner's Insurance Cover?

Q: What Does My Homeowner's Insurance Cover?

Are both internal and external damages always covered by my home insurance policy? I am so confused by what is and what isn’t covered by my homeowners insurance. I always just assumed that it included damage to the house and everything in it. But when my basement flooded and my washer and dryer got destroyed, I was told that it wasn’t covered. Why am I even paying for home insurance if it’s not covering me when I need it?

A: Basic homeowners insurance policies provide a measure of coverage for both the structure of your home and the contents kept within. However, the hazards that it covers against depend on the policy itself. There is no universal answer when it comes to what home insurance covers. Simply put, less expensive policies cover less; that’s why they are less expensive. Something that may be covered by my policy may not necessarily be covered by yours. 

But I should start by letting you know that there are some things that your home insurance policy absolutely will not cover. These are: floods, earthquakes, sinkholes and mine subsidence. If you live in an area where you are at risk for any of these hazards, you are strongly advised to purchase coverage through another type of policy, which you can then use to supplement your home insurance. 

As to the loss of your washer and dryer, some home insurance policies include coverage for Backup of Sewers and Drains. Although you did not specify how the water entered your home, during heavy downpours it is not uncommon for power to go out to sump pumps or for sewer systems to get overwhelmed. If the water entered your home because of one of these two causes and you had Backup of Sewers and Drains coverage, you would have been covered. 

If the damage was due to an actual flood, you would have needed flood insurance. Of course, floods are not the only hazard you face as a homeowner; that is why you have home insurance. It is important that you are aware of what type of policy you have and what it does and does not cover. 

Property insurance, whether related to your home’s structure or its contents, comes in two forms: named-peril and what is known in the business as “all-risk” coverage. Named-peril insurance says that you are covered for all perils that are specifically listed in your policy (e.g. fire, wind, theft, etc.). If the cause of the property damage you experience is not included on that list, you are not covered. Alternatively, all-risk insurance says that you are covered against all hazards except whatever is listed as exclusions (e.g. flood, sinkhole, hurricane, etc.). 

Because of the complexity of comparing different policies and understanding the coverage they provide, it is a good idea to work with an independent agent in our network. These agents can help you compare and understand insurance plans from a number of different providers. That way, you can purchase a home insurance policy that is well suited to meet your specific needs. They can also help you realize your exposures, such as potential flood damage, so that you know to purchase additional coverage.