For most of us, our home is our most valuable asset. We spend weeks or months searching for just the right house and days choosing the right colors to paint it. When it comes to fully considering the homeowner insurance coverage, we need to protect that asset; too many just buy it because the lender requires it. Most never take the time to learn precisely what homeowners insurance covers until a disaster strikes.
Learning what your homeowners insurance covers is critical to preparing yourself financially for the unexpected. You may discover that, based on your assets, you need more coverage on certain items. For example, if you have collected expensive antiques or art, you may need to update your policy. Just as crucial is understanding what your homeowners insurance does not cover so you can implement additional protection.
What Is Homeowners Insurance?
Homeowners insurance is a specific form of property insurance that protects the homeowner against losses and damage to their home and its contents. The homeowners policy provides financial compensation in case of common perils like burglary, fire, storm damage, and other specific risks. Additionally, the insurance provides liability protection, which covers legal or medical expenses if someone is injured on your property.
What homeowners insurance covers varies from carrier to carrier and even among coverage packages within the same company. That’s why reading and understanding your homeowners policy is so important. Below, we explain several of the basic coverages.
Dwelling Coverage
Your homeowners policy covers your house in case of damage caused by fire, lightning, hail, storms, or vandalism. This dwelling coverage typically includes the primary building and any attached structures, such as a garage or deck.
However, the cause of the damage can affect whether your homeowners insurance covers it. For example, if your skylight breaks in a storm and the rainfall ruins your flooring, your insurance will likely pay to repair the skylight and replace the carpet. However, if the washer leaks, causing water damage to the floor, your policy may pay to replace the flooring, but it will not cover the faulty appliance.
Other Structures Coverage
As it sounds, other structures' coverage protects structures on your property other than your house. This could include a guest house, shed, detached garage, gazebo, fences, etc.
Personal Property Coverage
Your personal property is typically included with your homeowners policy. This can consist of electronics, appliances, clothing, and furniture inside and outdoors on your property. Most policies contain a standard amount of coverage. If you have items of high value, it’s critical to ensure they’re covered adequately. You can purchase additional coverage via an endorsement for precious items like art, jewelry, furs, or coins.
Liability Coverage
Liability coverage is a crucial component of your home’s protection. It provides coverage if someone is injured on your property or if you or a family member damages someone else’s property. Depending upon your policy, it may pay toward repairs, medical bills, court fees, or legal judgments. Review your policy to ensure your homeowners insurance covers mishaps that occur away from your property. Peace of mind is invaluable.
Additional Living Expenses (ALE) Coverage
If covered damage to your home makes it temporarily uninhabitable, additional living expenses (ALE) coverage helps you pay for temporary expenses such as rental accommodations, hotel rooms, and meals.
Medical Payments Coverage
If someone who is not a member of your household suffers a minor injury on your property, your homeowners insurance's medical payments coverage covers their medical expenses. This can include ambulance rides, visits to the ER, hospital stays, and other medical bills.
Theft/Vandalism
Most homeowners insurance covers theft or vandalism, subject to policy terms.
What Does Homeowners Insurance Not Cover?
Understanding what homeowners insurance covers is critical to protecting your home and finances against the unforeseen. But learning what your homeowners insurance does not cover is just as crucial, and sometimes, it can be a bit confusing. For instance — water damage. Is it covered or not?
Homeowners insurance covers water damage that occurs suddenly due to causes directly associated with the house, such as a burst pipe, a malfunctioning appliance, or a broken water heater or window. However, it does not cover damage from a slow leak, which the homeowner is responsible for repairing. Further, flooding or water backing up from an outdoor sewer or drain is not covered without an additional rider.
Mold coverage in homeowners insurance is conditional and depends on the direct cause of the mold. It may be covered if mold results from a specifically covered peril, like water damage from a burst pipe. However, mold due to long-term humidity or maintenance issues is generally not covered.
One of the most common exclusions, or what homeowners insurance does not cover, is anything that is your responsibility. For instance, if you accidentally allow the bathtub to run over, damaging the tiles and plumbing fixtures, you will have to pay for the repairs out of pocket.
If you fail to maintain your HVAC system and the motor is damaged, your policy will probably not cover it. However, if your power company causes a power surge that damages your furnace, it will be covered since this event was not under your control.
Similarly, wear and tear, damage caused by pets, or intentional damage are not covered.
Losses incurred due to “earth movement,” such as earthquakes, sinkholes, mudslides, landslides, or volcanic eruptions, are not covered.
Any business you conduct in your home falls outside what your homeowner insurance covers. Consider separate business insurance.
Your personal property is covered under your policy, but the coverage is limited. Additional coverage or riders would be wise if you have particularly valuable property.
The best way to find out what your insurance does and does not cover is to read your policy, and if you have any questions, call Wawanesa and speak with one of our helpful agents, who will be happy to assist.
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