What Does A Homeowners Insurance Policy Cover?

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February 3rd, 2009

Building Property

You must cover the actual structure you live in, but also any other buildings like garages and storage sheds. Do not forget that expensive fence that surrounds your property, your swimming pool, and other fixtures. You will almost always buy property insurance that covers the replacement (and not the current) value of your home. If you purchased an older home for $100,000, and it burns down, you will not be able to rebuild for that amount. Most insurers add a certain percentage to the home value to cover replacement value, and most lenders will require this.

Building Contents

Your homeowners insurance policy should also cover your belongings, and will do that according to the limits you specified when you bought your policy. If your computer, television, or clothes are damaged or stolen, you want to be able to file a claim. Consider coving that property at the replacement value so you can purchase new items. Otherwise, your items may only be covered at current (garage sale) value.

Liability

In today’s society, lawsuits are common. If a visitor trips over your kid’s shoe or claims your dog bit him, you will want an insurance company on your side. Damage claims can be covered, and you insurer will also help to defend you in a lawsuit.

What Doesn’t A Homeowners Policy Cover?

Do not assume that your regular homeowners policy covers flood damage. You probably need to find a separate flood insurance policy. While water damaged caused by a leaking roof or pipe may be covered, rising water will not be covered. Make sure you understand how you would be covered if your home floods, even if you do not live in an area that is prone to flooding.

What If You Cannot Afford Your Homeowners Insurance Premiums?

Consider Raising Your Deductibles – If you cannot afford your premiums, try not to reduce your coverage limits. If you do suffer a loss, you will not likely be able to afford repairs either. You may consider raising your policy deductible. The premium difference between a $500 and $1500 deductible may save you hundreds of dollars every years. Of course, it would be a good idea to save that difference so you have cash to pay that deductible if you need to make a claim.

Shop Around

Insurers all use different criteria to set rates. While your zip code, which cannot be changed, may make the most difference, other factors come into play. For instance, some insurers will penalize the most prudent homeowner for a challenged credit history. Another insurer will reward that homeowner for safety features like smoke alarms.

We make it easy to compare local homeowners insurance rates with our fast, safe, and free online quote forms.