Home Insurance FAQ

The Big List of Homeowners Insurance Frequently Asked Questions: Start Here

(The more you know ... )

Table of Contents

Q. What is Homeowners Insurance?
What Does Homeowners Insurance Cover?
What Doesn’t Homeowners Insurance Cover?
Are Supplemental Homeowners Insurance Coverages Available?
Why Do I Need Homeowners Insurance?
How Much Does Homeowners Insurance Cost?
What Are Standard Homeowners Insurance Payment Options?
What Are Some Common Reasons Why Homeowners Insurance Is Canceled?
If a Friend or Family Member Moves into My Home, Do I Need to Add Them to My Policy?
Do Most Homeowners Insurance Policies Cover Airbnb Renters?
What Types of Home Changes Do I Need to Let My Independent Insurance Agent or Insurer Know About?
How Do I Compare Homeowners Insurance Quotes? What Should I Look for When Shopping Around?
What Are the Benefits of Independent Insurance Agents?

Q.What Is Homeowners Insurance?

No matter where you live, homeowners insurance is essentially an agreement between the homeowner and an insurance company in which the insurer agrees to cover financial losses relating to damages and liabilities. Of course, only the specific perils stated in the policy will be covered by the insurance company. Homeowners insurance is designed to help protect homeowners from losing their home should disaster strike.

Q.What Does Homeowners Insurance Cover?

A home is more than just the actual concrete or brick structure, it’s also the personal belongings within and surrounding it, the family/pets inhabiting it, and the friends who visit. Homeowners insurance is set up to protect all aspects of the home, not just the physical building itself. The more complex your home, the more coverage you may need, but here are the four major coverage areas included in standard homeowners insurance policies:

  • Structural damage: Covers what insurance companies refer to as the “dwelling,” or the structure of the home itself. Damage to or destruction of the dwelling by covered perils falls under this category. Coverage often extends to detached structures such as sheds, as well.
  • Personal property damage: Covers your personal belongings like furniture, clothing, electronics, knickknacks, silverware, etc., from perils such as fire or theft. Items stored within the home as well as external storage units are covered, though property stored off premises may have a lower coverage limit.  
  • Liability: Covers legal expenses such as attorney and court fees in the event you are sued for bodily injury or property damage to a third party. Settlements you’re ordered to pay if you lose the case are covered as well. Coverage extends to all members of the family living within the home, including pets. Many incidents that occur away from the home are also covered.
  • Additional living expenses: Covers living expenses in the event your home gets badly damaged or destroyed and you’re forced to live elsewhere while awaiting repairs. Your insurance company provides reimbursements for things like hotel rooms, eating out, extra gas mileage, and more. Additional living expenses cover the difference in spending to maintain your normal lifestyle while living away from the home.

These four components constitute the core of homeowners insurance packages. An independent insurance agent can help you get the right amount of coverage in each category for your unique home.

Q.What Doesn’t Homeowners Insurance Cover?

Like all coverage types, homeowners insurance comes with a list of specified non-covered perils. Becoming familiar with what your homeowners policy doesn’t cover can save you the hassle of filing claims that are bound to get denied, and in the event of certain non-covered natural disasters, help you find the right kind of policy to protect your home.

Standard homeowners insurance does not cover the following perils:

  • Certain natural disasters (i.e., floods, earthquakes, and mudslides)
  • Maintenance-related losses
  • Wear and tear damage (i.e., failure of the homeowner to maintain upkeep of the home)
  • Insect damage or infestations
  • Damage from war or nuclear fallout
  • Business-related liability

Your independent insurance agent can help you review your coverage and find out exactly what your policy covers and doesn’t cover.

Q. Are Supplemental Homeowners Insurance Coverages Available?

Depending on your unique home and all the needs that go along with it, you might find yourself searching for coverage that’s just not included in your homeowners insurance policy. Fortunately, there are plenty of supplemental insurance policies that can be combined with homeowners insurance to give you a more complete picture of coverage.

You may choose to supplement the following coverages with your homeowners policy:

  • Business liability insurance: If you run a business out of your home, even part time, you may want a business liability policy to cover any potential damage caused while on the job. Standard homeowners insurance typically won’t cover any liability mishaps that are business related.
  • Special vehicles coverage: Homeowners policies tend to limit liability coverage for certain types of vehicles, including aircraft, ATVs and boats, and have very specific exceptions for certain powered vehicles such as riding lawnmowers. If you own any special vehicles, you may need to get supplemental coverage.
  • Flood insurance and earth movement coverage: To protect your home against flood or earthquake damage, you’ll need a flood insurance or earth movement policy. Flood insurance policies are only available through the National Flood Insurance Program, which is a part of FEMA. If you live in an area prone to flooding or earthquakes, talk to your independent agent about supplementing your homeowners policy with one of these important coverages.

An independent insurance agent can advise you on whether or not supplemental coverage is right for your needs.

Q. Why Do I Need Homeowners Insurance?

You need homeowners insurance mainly to protect your home. If you’ve worked hard to afford a home you love, it deserves to be protected. Having adequate insurance coverage can prevent a homeowner from going bankrupt and losing their home (or stuff) following a particularly costly disaster. Standard homeowners insurance packages provide coverage for many common threats to the home.

Homeowners insurance typically protects your home from the following common perils:

  • 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)

Your independent insurance agent can help you review your homeowners insurance policy to ensure you’ve got enough coverage in every area.

Q. How Much Does Homeowners Insurance Cost?

Many factors influence the cost of a homeowners insurance policy including the size and location of your home, the value of the structure, the contents inside, and any upgrades you’ve made. Homeowners located in areas prone to severe weather or other risks like crime will be required to pay more for their insurance policies than those who live in calmer, safer areas.

It's hard to offer an exact figure without knowing your unique situation and the specs of your individual home, but as of 2020, homeowners insurance premiums tend to fall somewhere in the $650 and $1,650 range annually. The fewer risks associated with your specific home, the further you’ll likely find yourself towards the lower end of the spectrum. An independent insurance agent can help find more exact quotes for you.

Q. What Are Standard Homeowners Insurance Payment Options?

Fortunately for homeowners, there’s not just one option for paying your policy’s premium. While there are two main ways to pay for your policy, there are practically limitless sub-options which will vary with your insurance company.

The two major payment options for standard homeowners insurance include:

  • Paying in full: This option allows you to pay off a full year’s premium up front with just one check. Insurance companies tend to allow price breaks for individuals who go this route because they have fewer payments to process. Essentially, you both win.
  • Paying in installments: This is where all the sub-options come in. Your insurance company may offer you any variety of ways to cover your premium if you choose not to pay it all off at once. For example, when purchasing your policy, you may start by putting 20% of the annual premium down and then paying off the remainder equally over the remaining months of the year. Monthly installment premium payments tend to be a bit more expensive than paying in full, but are a more popular option for those homeowners who don’t have the means (or just don’t want) to put all that money down at once.

Your independent insurance agent can help get you more information about payment options for your specific homeowners insurance policy.

Q. What Are Some Common Reasons Why Homeowners Insurance Is Canceled?

Really, there are several reasons why an insurance company might choose to cancel your policy. It mainly comes down to the responsibility of the homeowner, both toward maintaining upkeep of the home so that it remains attractive for the insurance company to cover, and towards making premium payments on time.

Here are a few of the most common reasons why homeowners insurance is canceled or non-renewed:

  • Your home has fallen into disrepair.
  • You don’t pay your premium.
  • You have a certain number of major losses within a specified number of years.
  • You have a major liability loss.
  • Your claim contains misrepresentation (fraud).
  • You have a bad credit score.
  • The insurance company decides to no longer insure a certain category of home type.

When it comes to non-renewal, the insurance company chooses not to extend your coverage after the one-year mark. If this happens, the insurance company must give you advance notice of their intent not to renew your coverage. However, your homeowners insurance company may choose to cancel your policy at any time if you fail to remain a profitable/responsible client.

Q. If a Friend or Family Member Moves into My Home, Do I Need to Add Them to My Policy?

When it comes to a family member, the answer is no. If someone is related to you by blood, marriage, or adoption, the insurance company considers them to be a family member, and the same coverages are extended to them as to all other household members. So you don’t need to go through the process of adding them to your policy.

When it comes to a friend or non-family member, the major distinctions in coverage are on the liability side. Medical payment coverage may not extend to mere “residents” of the household, only family members. You also need to consider if you want your property insurance to cover this person’s stuff. If the answer is yes, you should add them to your policy.

Q. Do Most Homeowners Insurance Policies Cover Airbnb Renters?

Fortunately with the popularity of Airbnbs today, the answer is yes, if you’re the renter. When it comes to renting a room, whether it’s in a hotel or an Airbnb, homeowners insurance still protects you while you’re away. Your homeowners insurance policy covers you from a liability standpoint in the event you cause property or other damage or upset to the Airbnb or its owners/other inhabitants. This aspect of protection covers legal expenses and court fees.

Your homeowners insurance policy also protects your personal property while renting a hotel room or an Airbnb. For example, if there was a fire at the Airbnb and your stuff got damaged or destroyed, you’d be covered under your personal property coverage, even though you’re away from home. However, the extent of your coverage is likely to be less than if the incident occurred within your home.

But what about Airbnb owners?

Now if you’re actually renting out part or all of your home as an Airbnb owner, you’ll probably need a slightly different kind of policy known as a dwelling policy. Dwelling insurance is similar to homeowners insurance in the respects of property and contents coverages, however it doesn’t include everything a normal homeowners policy does. One area where dwelling policies lack sufficient coverage is on the liability side.

Airbnb owners who rent out their property will likely want to supplement their dwelling policy with a liability endorsement, or choose to extend the liability coverage from their main home to also cover their second home. This is known as an “additional insured location,” and would require you to pay an additional premium. An independent insurance agent can advise you on the best coverage to meet all the needs of your Airbnb.

Q. What Types of Home Changes Do I Need to Let My Independent Insurance Agent or Insurer Know About?

When it comes to upgrading/updating your home, you’ll want to keep your independent insurance agent and/or insurer in the loop, because any changes you make to your home could influence the cost of your premium. Fortunately in the case of upgrades, you’re often likely to be rewarded with a lowering of your premium. However, if you add a risky element such as a pool or trampoline, you might experience an increase in the cost of your policy.

Tell your independent agent or insurer if you decide to make any of the following changes to your home:

  • Additions (e.g., sheds or other sections of the home)
  • Finishing the basement
  • Updating or replacing the roof
  • Updating the heating/cooling systems
  • Installing a pool or trampoline
  • Installing a security system or burglar alarm
  • Installing a sprinkler system or fire extinguisher
  • Performing cosmetic improvements such as fresh paint jobs
  • Adding a fence or gate
  • Adding solar panels or other energy-efficient systems

A good rule of thumb is that if you’ll be updating/upgrading your home in a major way, go ahead and let your insurer or independent insurance agent know. It’s best to keep your insurance company in the loop whenever you make a huge change to your home so you can continue to receive the coverage you deserve at the correct rate.

Q. How Do I Compare Homeowners Insurance Quotes? What Should I Look for When Shopping Around?

In order to get the protection you need and deserve, you’ll want to work with a trusted expert. And who could be better for the job than a local agent who shares your area code? Independent insurance agents act as your own personal insurance shoppers, offering you tons more options than one-policy companies. With just one call, they’ll hook you up with multiple quotes.

Independent insurance agents are armed with knowledge on what coverage is needed in your area, and they’ll get you set up with just enough of it — not too little, not too much. They’ll handle all the heavy lifting so you can rest assured you’ll be set up with the right coverage at the right price.

Q. What Are the Benefits of Independent Insurance Agents?

Independent insurance agents have access to multiple insurance companies, ultimately finding you the best coverage, accessibility, and competitive pricing while working for you. Find an independent insurance agent in your community here.

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TrustedChoice.com Article | Reviewed by Paul Martin

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