What’s Covered by Home Insurance (And What Isn’t)?

What Does Homeowners Insurance Cover?

If you own a home, you definitely need a homeowner’s insurance policy to protect your investment. But many people are uninformed about what types of damages homeowners insurance does cover and are not aware of which add-ons they should purchase or how high their deductible should be.

Rather than leaving your home—and your financial situation—vulnerable to potential damages, it’s important to understand what’s covered by your home insurance (and what isn’t). Thanks to that you’ll know how to modify your standard policy by choosing the right coverage limits and endorsements. It’s wise to make sure your personal belongings, property, and your family members are covered. (Here’s which insurance companies offer the best home insurance in 2021).

What does a standard homeowners insurance policy cover? What does this type of policy include? The main types of coverage categories are:

1. Dwelling coverage

Dwelling coverage provides financial protection to the physical structure of your property if it suffers damage due to a loss listed on your home insurance. To choose the right dwelling coverage amount, you need to know the replacement cost of your home (which is not the same as its market value). It will pay the cost to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning, or other disasters included in your policy. 

2. Personal property coverage

The homeowners insurance policy also protects the value of your personal belongings such as clothing, furniture, golf clubs, and other items inside the home. If your personal items are stolen or destroyed by fire, hurricane, or other covered disasters, your insurer will pay to replace them. Even if your personal belongings are stolen or damaged while they are not at your home—such as in a hotel room while on vacation—your homeowner’s policy will pay to replace them within limits. However, if you have any valuable items, you may need to modify your policy with specific add-ons or purchase a separate policy like jewelry insurance.

Your homeowners insurance policy protects you in the event of certain covered losses, namely:

• Damage caused by weather conditions, such as hail, windstorms (here’s what natural disasters are included)
• Fire
• Smoke
• Theft
• Vandalism
• Water damage caused by a leak in the plumbing system (however, if it happened due to your negligence, your claim may be rejected by your insurer)
• Gas explosions
• Weight of ice or snow on the roof

3. Liability protection

In addition to your home and its contents, your home insurance protects you if someone sues you or your family members for property damage or bodily injury. In such a case, your insurance company will pay your legal fees, as well as the cost of any court awards. If someone is injured in your home, or your dog bites your guest, your policy includes no-fault medical coverage. This means your insurance company will pay the person’s medical bills directly and there’s no need for them to file a liability claim against you (and lawsuits can cost a lot). 

Noteworthy, liability coverage extends protection while you’re away from your home, meaning it will cover you if you injure another person outside of your property. However, it doesn’t include a vehicle-related injury as it requires separate auto insurance.

4. Additional living expenses (loss of use coverage)

If your home is so damaged from an insured disaster that you are unable to live there until repairs are completed, your insurance policy will pay for alternative living arrangements. Those expenses include rental or hotel bills, restaurant bills, and other costs, while your home is being rebuilt. However, before you incur any costs, you need to get approval from your insurer. 

5. Medical payments

Provides protection if your guest gets injured on your property. This type of coverage will cover (up to your policy limits) medical bills and any medical expenses, no matter who was at fault. Medical payments coverage can also cover you in case your dog bites your guest, but you have to remember that some breeds are excluded from your insurance. A harsh bite may end up generating horrendous medical bills which can be greater than your medical payments coverage limits. In such a case, you would have to report a claim on the liability section of your insurance. 

6. Other structures

This part of the HO-3 policy covers replacing or repairing structures at your property other than your home if they are damaged in a covered loss. Other structures mean things like fences or detached garages. They are usually protected for the same perils as your home.

If you ever make any adjustments or improvements at your property (like adding a fence), you should revise your other structure’s coverage limits to make sure you get enough coverage.

What does homeowners insurance not cover?

Standard homeowners insurance coverage does not cover damage caused by a flood. If you live in a flood zone or your property is at risk for other natural disasters, you may need to purchase additional home insurance coverage or a separate policy. You can purchase earthquake or flood insurance through Gabi, sign up to get a free insurance quote today.  

But what about leaks, are they included in homeowners insurance coverage? Yes and no. If a leak was caused by flooding from an external source, you need to have a flood policy to get a payout. But if a pipe breaks or there’s a sudden leak in the plumbing causing any losses, it will be covered by your standard homeowners policy. However, if the pipe broke due to your negligence or its age, your insurance company may deny accepting your claim and you won’t receive reimbursement. Proper maintenance is upon you and you have to check regularly if the plumbing system in your property is working. Also, if water backs into your home from an outside sewer or drain, you would need to add sewer or water backup coverage to your standard home policy.

Another natural disaster that requires additional policy is an earthquake as the damage caused by it won’t be covered by your homeowners policy. 

Also, routine wear and tear and any damages caused by your neglect won’t be covered by your standard policy. So make sure to check the condition of your property to see if there’s anything that needs to be repaired or replaced. If you fail to do that and something bad happens to your property, an insurer may reject your claim and you won’t receive any reimbursement.

The last important thing you need to remember is that your homeowners insurance policy coverage doesn’t extend to protecting your car. You need separate auto insurance to make sure your vehicle is covered.

A homeowners insurance policy is crucial if you want to protect yourself against unexpected costs. However, you need to choose the right amount of coverage suitable for your needs, add specific add-ons, or even buy separate policies to make sure your home is covered. The standard policy doesn’t include some natural disasters, or won’t provide you with financial protection in case of each property damage so it’s good to get advice from a licensed insurance agent. You can get it for free – simply sign up with Gabi and get homeowners insurance coverage for free!