What Does Homeowners Insurance Cover? What Is Not Covered?
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.
What Does Homeowners Insurance Cover?
Chances are, you’re not having a great day if you’re wondering, “What does homeowners insurance cover?” Maybe the wind just blew down your backyard fence or your dishwasher decided to flood your kitchen. While these things might be a pain to deal with, if you have good homeowners insurance, the hassle will be mitigated.
What Exactly Does Homeowners Insurance Coverage Include?
Homeowners insurance offers financial protection in case your home or its contents are damaged due to “peril,” like a fire, heavy storm, or accident. Homeowners insurance also typically provides protection if a visitor is injured or their property is damaged while spending time at your home. It’s not mandatory to have homeowners insurance, but most mortgage lenders do require it.
If a type of peril included in your policy damages the structure of your home, homeowners insurance will generally cover it. This can include fixing shattered windows, fallen walls, damaged plumbing, and waterlogged floors, among other things. Homeowners insurance can also cover structures that are detached from your home but on your property, including garages, fences, and sheds. A good rule of thumb is to make sure your homeowners insurance policy provides enough coverage to rebuild the entire structure of your home in case of emergency. Detached structures are usually covered at up to 10 percent the value of your home.
Personal Property Coverage
The things inside your house, including furniture, clothes, electronics, and other personal items are covered by homeowners insurance if lost or damaged by an insured peril. These items are typically covered at about 50 to 70 percent of the value of your home. Homeowners insurance also covers those belongings if they are somewhere other than in your home when the loss or damage occurs. For example, if your suitcase of clothes is lost while on vacation, your homeowners insurance will help you replace those items if you file a claim, though, this amount is sometimes limited to about 10 percent of the value of your property.
Homeowners insurance may cover up to $500 of unauthorized use on your credit cards as well as the loss or damage of valuable items like jewelry and collectibles. If items are especially expensive, you might need to add a “floater” to your policy that insures the item for its appraised value. Trees, shrubs, and bushes on your property are also included in most policies as personal property.
Homeowners insurance contains liability coverage that protects your assets in case you or one of your family members (including pets) causes injuries or damage to someone else or their property. This includes the cost of your defense in court as well as any monetary award up to a stated limit (usually around $100,000).
Homeowners insurance policies also provide no-fault medical coverage. If a visitor is injured in your home, your homeowners insurance will reimburse their medical bills to avoid a liability claim in court.
Additional Living Expenses
If you must temporarily move out of your home while it is being repaired due to an insured peril, your homeowners insurance will cover your living expenses, including hotel and restaurant bills, up to a limit. If you make income by renting all or a portion of your house and that is no longer possible because of damage, your homeowners insurance will cover that as well.
What Does Homeowners Insurance Not Cover?
Most homeowners insurance policies do not cover damage caused by floods, earthquakes, or sinkholes. You can purchase a separate policy if you want coverage for these perils. Homeowners insurance also won’t cover damage caused by daily wear and tear or issues that could have been avoided with proper home maintenance.
Expensive items like jewelry, art, and collectibles may not be covered at their full value. If you have valuable things, you can purchase a separate policy or add a floater to your homeowners insurance.
If you, a family member, or a pet who lives in your house are injured on your property, your homeowners insurance will not cover any medical bills.
Finally, keep in mind that with most homeowners insurance policies, you will need to pay a deductible. A higher deductible will make your monthly payments lower. But, it won’t pay to file claims that cost less than your deductible. For instance, the cost to replace a window that sprung a leak in the rain might be $800. If your deductible is $1,000, it makes more sense to pay that $800 out of pocket than to file a claim. When shopping for insurance policies, make sure you ask, “What does homeowners insurance cover?” and “What kind of deductible works best for me?”