What Does A Homeowners Insurance Policy Cover?
For many people, the home they worked hard to acquire or build is their most significant investment.
As such, it needs protection in the form of home insurance coverage.
So, what does home insurance cover? Let’s look at the coverage a standard homeowners insurance policy typically provides.
The Structure of Your Home
Home insurance covers any visible or non-visible damage to the roof, walls, foundation, or any part of your home’s structure. The same goes for your detached garage, tool shed, gazebo, and fence.
Your insurer will compensate you for damage or loss caused by any of the following perils:
- Fire
- Smoke
- Lightning
- Windstorms
- Hail
- Explosions
- Rioting
- Theft
- Vandalism
- Vehicles or aircraft crashing into your home
- Falling objects such as tree limbs
A standard home insurance policy does not cover damage or loss caused by earthquakes and floods. If you live in an area where flash floods and earthquakes occur more frequently, you will need to get separate coverages for such perils.
Your Belongings
Should you find your furniture, appliances, jewelry, clothing, gym equipment, and other personal belongings lost or damaged due to the perils listed above, home insurance will provide coverage up to the policy limits.
To see if your home insurance coverage is enough to cover certain high-value items like jewelry or antiques, check your policy for the maximum amounts the insurer will pay for them. Purchase more protection if you think the coverage won’t cut it.
Liability Protection
Home insurance policies typically cover personal liability as well.
That means you won’t have to pay out of pocket for liability claims for personal injury or property damage that occurred within your premises or caused by members of your household, pets included. Your liability protection extends to anywhere in the world, too.
So, if a pizza delivery guy slips on your front porch or your child tosses a Frisbee straight through a neighbor’s glass window, your home insurance policy will pay for the former’s medical expenses and the cost of repairing damage to the latter.
Should you find yourself at the receiving end of a lawsuit, your home insurance policy’s liability protection component will pay for the litigation and other court costs. If the judge rules against you, your liability coverage will take care of the compensation you’ll be ordered to pay the claimant.
As with other aspects of your policy, your liability coverage will depend on its limits, which usually start at around $100,000. For higher liability limits and broader coverage to include protection from slander and libel lawsuits, you might want to consider adding an umbrella or excess liability policy.
Additional Living Expenses (ALE)
When a covered peril strikes your home, there is a likelihood that the damage is severe enough to force you and your family to stay elsewhere until repairs are done.
Whether you’re staying at a hotel or with a relative or friend, you’re bound to incur expenses, which are covered by your homeowners insurance policy through its additional living expenses or ALE provision.
The ALE feature of your home insurance policy will pay for the meals, hotel bills, and other expenses you incur until you can finally return to your fully-repaired home.
Again, your ALE coverage has limits, too, so check with your insurance provider to know the amount you’re entitled to in your policy.
While it’s true that insuring your home is not mandatory unless you acquired it through a mortgage loan, the coverage you’ll get from home insurance should at least make you consider it.
No one can predict when a disaster strikes. If your home—presumably your most valuable financial asset—gets hit with one, you can rely on your homeowners insurance policy to help you recover from the damage or losses it causes you.
About The Author
Rachael Harper is the Content Marketing Strategist of Bennett & Porter, a wealth management and insurance firm based in Scottsdale, Arizona. When not writing, she makes use of her time reading books and playing bowling with her family and friends.