Homeowner’s Insurance – What’s Covered?

If you’re a new homeowner, you’re probably inundated with bills, mortgage payments, home repairs, taxes, and a myriad of other concerns. What may have slipped between the cracks is homeowner’s insurance. Do you have it? Or, are you aware of what homeowner’s insurance is and why do you need it?

What is Homeowner’s Insurance?

A standard homeowner’s insurance policy provides protection against disasters and damage related to your home. What’s crucial for understanding homeowner’s insurance is that it is a package policy, covering not only your home. In addition, homeowner’s coverage includes:

• the structure of your home,
• your personal belongings,
• liability protection, and
• additional living expenses (known as ALE or loss of use)

The Structure of Your Home

If your home is damaged or destroyed by a hurricane, hail, fire, or another disaster that is listed in your policy, your homeowner’s insurance policy will pay based on the amount of coverage that is specified in your policy. The safest guideline to follow is have enough coverage to rebuild your home.

Detached structures on your property, such as a garages or gazebos, tend to be covered on most policies. However, they are generally covered for only ~10% of the insured structure of your home. Your home’s foliage is also covered—plants, trees, garden, and shrubs—generally for $500/item if the damage and loss isn’t related to disease or wind.

Personal Belongings

Homeowner’s insurance also extends to your personal belongings. If a fire, hurricane, or other insured disaster strikes your belongings, you are covered. In addition, if your belongings are stolen, they are also covered.

Depending on the type of extent of damage and your policy, this coverage is generally determined by 50 – 70% of the insurance on the structure of your home. Conducting an inventory for your home and itemizing the value of your belongings can help determine if your coverage is adequate.

*NOTE: Items destroyed or stolen under personal belongings coverage are covered outside of the home—basically anywhere in the world. Some companies only offer 10% of your coverage off-premises. Expensive items (ie. fur coats) are typically insured separately from your homeowner’s policy and are subject to different limits of coverage.

Liability protection

If you or one of your family members inflicts bodily or property damage to other people, liability protection covers you against potential lawsuits. This includes your pets, too. If your spouse, dog, or neighbor accidentally breaks a neighbor’s window, then you’re covered. Most plans include the cost of defending your case in court and any amount that court awards up to a limit stated in your policy’s documents.

In addition, liability protection also provides no-fault medical coverage. If a person other than your family members is injured in your home, the medical bills can simply be submitted to your insurance company. The advantage of this is that you circumvent having a liability claim filed against you.

Additional Living Expenses (ALE / Loss of Use)

If you cannot live at your home after an insured disaster occurs, ALE covers the expenses (hotels, meals, etc.) exceeding your normal expenses while your home is being rebuilt. This also extends to parts of your home that you rent out (ie. Airbnb), being calculated by the amount of rent you would potentially collect had your home not been damaged/destroyed.

What Homeowner’s Insurance is NOT

It must be noted that NOT all natural disasters are covered by most homeowner’s insurance packages. Damage from earthquakes and floods require separate insurance policies altogether.

General wear and tear is usually NOT covered by homeowner’s insurance policies. For example, if faulty pipes are determined to cause damage to your house, property, and/or occupants, then be aware that these damages are NOT covered.

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As homeowners, we know that doing-it-yourself can only so far. Some jobs are simply too difficult to determine just how much time and money it’ll take to finish. This is no different than finding the right homeowner’s insurance you and your family need. At RiskBlock, we seek to take the load off of your shoulders. Click here to begin covering your home and your possessions without breaking a sweat.

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