What’s covered by a homeowners insurance policy?
There’s a lot that needs protection when you’re insuring your home. There are typically four areas where a homeowners insurance policy protects you: structural damage, damage to your belongings, loss of use, and liability protection.
Typically, if your home is damaged or destroyed by a covered incident (see below), you’ll be reimbursed the costs to rebuild or repair your home, up to the limits of your policy. Most homeowners policies also cover structures that are detached from your home, like a shed or a garage. In most cases, this is usually a percentage of the dwelling protection. For example, if your policy limit is 10% a $300,000 policy would cover a detached garage up to $30,000.
What about my belongings?
The structure of your home is important, but what about all of your valuables that are kept inside of your home? All of your personal property, including your clothing, furniture, appliances, and electronics are also covered on your homeowners policy. Should your valuables* become lost or damaged in a covered incident, or stolen, you will be reimbursed actual cash value or replacement cost (depending on the coverage type you select). Typically, personal property coverage is around 50%-70% of the amount of insurance you have for the structure of your home.
*We recommend you take inventory of your belongings before you purchase a homeowners insurance policy. Having an idea of how much your stuff is worth is helpful when you’re trying to determine what your policy limits should be. If you’re over-insured, you could be paying too much on your policy premium, and if you’re under-insured, you could be left out of pocket thousands of dollars if you need to file a claim.
Covered incidents include:
- Storm damage from lightning, hail, or heavy winds
- Fire and/or smoke damage
- Weight of ice, snow, or sleet
- Vehicle or aircraft damage
- Vandalism, theft, or riot damage
- Fallen object(s)
If you have expensive furs, watches, or jewelry, you can purchase a floater policy, which covers one specific piece of personal property. Earthquake and flood insurance are not part of the basic policy, but can be purchased separately.
Additional homeowners insurance perks…
If your home becomes uninhabitable due to a covered incident, your homeowners insurance policy will help reimburse you for the cost of any temporary living expenses or loss-of-use, like a hotel room and meals.
Your homeowners insurance also covers you for the cost of bodily injury or property damage lawsuits from a third party if you were at-fault. Let’s say someone slips and falls on your property, your liability coverage will help you cover any medical expenses or court expenses you might have to pay.