FAQ: What Does Homeowners Insurance Cover?

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What do standard homeowner's insurance policies cover?
What are the main homeowner's insurance coverage categories?
What are common covered perils under homeowner's insurance?
How much does homeowner's insurance cover?
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What Do Standard Homeowner's Insurance Policies Cover?

As a new homeowner, I’m curious about what all is covered under my insurance. I have concerns about the house itself, my personal property, and the safety of any people inside my home at a given time. There are just so many potential disasters that could occur within or around the home, so what do standard homeowners insurance policies cover?

Homeowners insurance provides protection for both the actual building and its contents, as well as the family living inside the home. The four main categories where homeowners insurance provides protection include the home’s structure, personal property, liability, and additional living expenses. We’ll take a closer look at exactly what each of these categories entails in the following section.

What Are the Main Homeowner's Insurance Coverage Categories?

Homeowners insurance takes all aspects of the home into consideration. A home isn’t just the actual building, it’s also the contents inside and surrounding it, the family inhabiting it, as well as guests who come and go. Homeowner's insurance is designed to protect you from disasters that may befall any of the home’s major aspects. We’ll break down the four major coverage areas provided by standard homeowner's policies for a deeper understanding.

The four major homeowner's insurance coverage areas include:

  • Damage to the home’s structure: The first category of property damage concerns the actual dwelling, or the structure of the home itself. Your homeowner's policy protects the dwelling from damage or destruction due to covered perils which we’ll explore further in just a moment. Detached structures, such as sheds, are often covered as well.
  • Damage to your personal property: This property damage category covers your belongings, including furniture, electronics, clothing, artwork, knickknacks, etc. stored both within the home and in other places such as storage units. Damage or destruction of your personal property due to a covered peril as well as theft is all protected under your insurance policy.
  • Liability: This category includes liability coverage for both bodily injury and property damage to a third party. Coverage extends to all members of your family living in your home, including your pets. Liability coverage protects you against legal claims by reimbursing you for attorney and court fees, including any settlements you’re ordered to pay if the case rules against you. Your homeowner's policy even protects against incidents away from home in which you are sued.
  • Additional living expenses: If your home gets badly damaged or destroyed and you’re forced to live elsewhere while repairs are being done, your insurance will reimburse you for the additional expenses such as hotel rooms, eating out, extra gas mileage, etc.

Whether your home gets damaged or you accidentally injure a guest, your homeowner's insurance will likely cover you. Of course, in order for a claim to be successful, the cause of the issue will have to be due to a covered peril. We’ll take a closer look at what those are next.

What Are Common Covered Perils Under Homeowner's Insurance?

The best way to know whether you’ll be protected against something by your homeowner's policy is to first learn what insurance companies consider to be covered perils. For example, all natural disasters have the potential to cause major damage to the home, yet not all of them are covered by standard policies. Let’s break down the most common covered perils under homeowner's insurance.

The following perils are commonly covered by homeowner's insurance:

  • Theft
  • Vandalism
  • Explosion
  • Fire and smoke
  • Water damage
  • Aircraft or vehicle damage
  • Riots
  • Falling objects (and trees)
  • Certain natural disasters (i.e., windstorms, hail, lightning, and blizzards)

Notice that homeowners insurance does not protect you from flood damage or earthquakes. You would need special, separate insurance policies for those disasters.

How Much Does Homeowner's Insurance Cover?

Your coverage limits will depend on your specific policy, but often you’ll find that 10% of your coverage is for the dwelling and 50-70% is for your personal property. Usually 10% of your personal property’s limit applies to property you store off-premises, such as in a storage unit. Liability insurance limits are often $100,000 to $500,000 in most policies. You can always purchase additional coverage if you’re concerned you don’t have enough.

You’ll also need to first meet your policy’s deductible before your insurance will start covering you. A standard homeowners policy has a deductible that’s typically 1% of the home’s value—so if your home is worth $300,000, you might have to exceed $3,000 in damaged personal property before your insurance will reimburse you. However, you can work with an experienced independent insurance agent to hunt for a policy for a lower deductible if you wish.

If you’re concerned about not having enough liability coverage, you can also purchase umbrella insurance. Umbrella policies allow you to increase liability coverage limits up into the millions, and it’s not too expensive to get it. Premiums are often just a couple hundred bucks for the year. Umbrella coverage may save you from having to pay hundreds of thousands of dollars out of pocket for an extremely high lawsuit settlement.

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TrustedChoice.com Article | Reviewed by Paul Martin

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