Homeowners insurance protects your home and its contents against disasters such as fire, wind, hail, flood, and lightning. Even if you live in an apartment or condo, you need homeowners insurance.
These properties are generally not insured against loss from conventional disaster risks; only catastrophic events like earthquakes or volcanic eruptions are typically covered by a condominium association’s liability policy or mortgage loan.
If you own a home, even an apartment or condo, you need homeowners insurance to protect it from perils such as fire, windstorm, theft, vandalism, and other hazards.
This article explains what is covered by homeowners insurance and what isn’t. It also provides tips on finding the right policy at the right price for your circumstances.
Homeowners Insurance: What is covered by a standard homeowners policy?
A standard homeowners policy covers losses from 10 perils, such as fire, windstorm, hail, lightning, vandalism, theft, earthquake, flood and breakage of water pipes caused by freezing.
The first six are called “named perils” because the policy lists them by name. The last four are called “general perils” because the policy lists them as “all other perils except those listed in Section II.” Section II lists named perils that are not covered.
The standard homeowners policy has two important limitations. First, the policy covers only losses to the dwelling itself, not the things inside it. Second, the policy does not cover damage resulting from the insured’s negligence.
For example, if your child leaves a hot curling iron on the bed, leaving it there until it catches fire and burns the house down, the insurance company will not pay for the loss.
What is not covered by a standard homeowners policy?
Not every risk is covered by a standard homeowners policy. It doesn’t make sense to carry coverage for perils that are extremely unlikely to happen.
The following perils are not covered by a standard homeowners policy:
– Flood
– Earthquake
– Volcanic eruption
– Property used for commercial purposes
– Hurricane
– Storm surge
– Hail
– Theft of property
– Damage caused by an intoxicated person or contractor
– Damage caused by a contractor working for you
– Damage caused by a houseguest
– Damage caused by a tenant living in the house
Tips for Finding the Right Homeowners Insurance
If you’re shopping for homeowners insurance, be sure to review the policy to make sure the coverage meets your needs. Here are some tips to help you choose the right homeowners insurance policy.
– Shop around – Compare policies and prices from several insurers to get the best fit for your needs and budget.
Insurers use different methods to determine premiums, so your insurance costs could vary if you switch companies.
– Ask about any discounts offered, such as for having fire protection, alarms or a security system. – Make sure the policy is backed by a financially strong company.
READ: Mistake To Avoid When Buying Term Insurance And How To Fix Them
– Check the policy for accuracy to make sure the details match your situation.
– If you later acquire a swimming pool, especially one that requires maintenance, be sure to buy additional liability insurance to cover potential accidents.
– If you remodel or build an addition to your home, provide the insurance company with copies of all the building and zoning permits.
If you make significant improvements to the home, buy additional insurance called builder’s risk insurance.
READ: The 3 Biggest Mistakes people Make When Buying Auto Insurance
Theft Coverage
Most homeowners policies provide limited coverage for theft losses. For example, a standard homeowners policy usually covers up to $1,000 for loss of jewelry and other personal property, if you can prove the items were stolen. It may also cover the cost to change the locks, repair broken windows and doors, and remove graffiti. Ask your insurer if these types of losses are covered.
However, a standard homeowners policy does not cover loss of the house itself due to theft. If you are away from the house and someone breaks in and steals the furnace, water heater or other appliances, or the wiring that provides electricity to the house, those losses are generally not covered by a standard homeowners policy.
Similarly, a standard homeowners policy does not cover damage caused by rodents or insects.
Windstorm and Hail Coverage
Most homeowners policies provide limited coverage for windstorm and hail losses.Windstorm and hail coverage can be added to a homeowners policy as an endorsement to increase coverage.If you live in an area prone to hurricanes, consider purchasing a separate hurricane policy.
Fire Coverage
Most homeowners’ policies provide basic fire coverage up to a specified amount. If you own very expensive items such as jewellery, furs, or collectibles, you should consider buying additional fire coverage on a separate policy
.If your house catches fire, fire coverage pays for the cost of repairs and the expense of renting a place to live while your house is being rebuilt.
It also covers the loss of any possessions that could not be saved. However, it does not cover the cost of rebuilding a house that is destroyed by fire.
Homeowners insurance is a must if you own a home. This article has explained what is covered by a standard homeowners policy, and what isn’t. It has also provided tips on finding the right policy at the right price for your circumstances. Do well to fins out from a trusted insurance company more about buying home insurance.
Image Source: Unsplash
Source: Wisdom Hammond
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