What Does Homeowners Insurance Cover?

by Kanopy Insurance

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Protecting your home from a natural disaster comes down to one thing: homeowners insurance. As simple as it sounds, you may be surprised at the amount of homeowners that have not purchased insurance. There are 3.5 million uninsured homes in the United States.

With limited savings in your emergency fund and covering your child’s college tuition, paying for these fixes can be a challenge, but with homeowners insurance you don’t have to worry.

So, what does homeowners insurance include?

In this article, we’ll guide you through what is covered by homeowners insurance, what homeowners insurance does not cover, and why you need it.

What Your Homeowners Insurance Covers

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Homeowners insurance policies will cover your home and personal property from most natural disasters. In many cases, it will cover the additional living expenses if cannot live there after a natural disaster.

Homeowners insurance policy coverage includes:

  1. Dwelling protection
  2. Personal property
  3. Additional living expenses (or loss of use)
  4. Liability protection
  5. Other structures
  6. Other home coverages

If this list seems like a simplified version of the traditional insurance company buzzwords you try to avoid, don't worry. We break down what homeowners insurance is in the details below.

1. Dwelling protection

Dwelling protection is part of your homeowner's insurance policy that will help rebuild or repair the structure of your home caused by natural disasters or "perils" listed in your policy. Depending on the homeowner's insurance carrier, your plan provides a list of "named perils." A named perils policy covers windstorm, smoke, fire, and other risks listed in your insurance agreement.

The dwelling coverage will pay to repair the physical structure of your home up to the policy limit. To receive the full benefit of your coverage policy conditions requires you to insure your home for an amount that's at least 80 percent of its replacement cost. If you fail to meet this condition and a covered peril damages your home, the insurance company may not pay the full amount of your repairs.

2. Personal property

Homeowners insurance policies pay for damage to your contents while in your home and, under certain circumstances, when you are away from home. The HO 2 and HO 3 homeowners insurance forms cover your personal property only for named perils listed on your insurance agreement, such as windstorm, smoke, fire, and others. The HO 5 policy form, provides "all risk" coverage for both the dwelling and your personal property.

3. Additional living expenses (Loss of use)

A critical benefit of your homeowner's insurance policy is its ability to respond to your needs after a covered loss. Loss of Use coverage pays for temporary housing, and living expenses you would not have incurred had your home not been damaged. It also pays your extra expenses for food, transportation, and other reasonable charges for necessities that exceed your normal costs.>

4. Liability protection

When someone alleges that your actions or a condition on your property caused injuries or property damage, the potential financial consequences can jeopardize everything you own. Your homeowner's insurance policy protects you and your family from the legal and financial fallout.

For example, if your neighbor seeks emergency treatment after a slip and fall in your home or if your dog bites a stranger, the claim department investigates the circumstances. If they determine that you are legally liable, they will pay the injured party's expenses and settle the allegation. If you are not responsible, they will pay to defend any lawsuits an injured person files against you. To reduce the chances of formal legal actions the claim department can pay their medical bills under your policy's Medical Payments provision.

5. Other structures

Coverage B under Section l of your policy covers "Other structures." This coverage pays to repair or replace adjacent structures such as garages, fences, and sheds. It also pays for materials next to or near your residence if those materials were for construction, alterations, or repairs to your other structures. The coverage limit for this class of property is a maximum of %10 of your policy limit.

6. Other home coverages

Insurance companies structure homeowners policies to cover most of the perils a typical property owner could encounter. If you require additional coverages not included in your policy, you can request an endorsement to add what you need. You may also add special coverages on a separate policy.

Here are a few examples of additional home coverages:

  • Special coverage for contents broadens personal property coverage, adding more covered situations than included in your basic homeowners policy.
  • Contents replacement cost coverage amends your plan to provide replacement cost coverage for contents, so depreciation doesn't apply. Deductibles and special limits on jewelry, watches, furs and other valuable content still apply.
  • Additional replacement cost coverage extends your policy to cover dwelling insurance limits that are low due to increases in your home's value. It helps you avoid claim penalties caused by the 80% replacement cost requirement.
  • Valuable items plus expands protections and coverage limits for jewelry, silverware, fine art, furs, cameras, musical instruments, home computers, and other special classes of property.
  • Personal articles floater insures high dollar assets on a separate personal articles floater. You may insure valuable items for a scheduled amount or on a blanket basis.
  • Coverage for water back-up pays for the time-consuming and expensive cleanup and repairs due to a sewer or drain backup or an overflowing sump pump.
  • Identity fraud coverage reimburses up to $25,000 for costs necessary to restore your identity after a fraudulent event.
  • Green home coverage pays to restore green home technology that's been damaged by a covered peril.

What Homeowners Insurance Does Not Cover

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Do you have homeowners insurance, but you're not sure what really isn't covered? We've got your back. Homeowners insurance can cover a range of costs, but it can't cover everything. If it did, premiums would soar, making insurance a luxury few could afford. To keep insurance available to consumers policies must exclude unpredictable risks.

Here are items homeowners insurance does not cover:

  • Mold
  • Sewer backup
  • Sinkholes
  • Termites
  • Nuclear plant
  • Acts of terrorism
  • Injuries caused by certain types of dogs
  • Earthquakes
  • Flooding

Why You Need Homeowners Insurance

Owning your own home is an American dream. Your dream becomes a nightmare when a catastrophe damages your home. Without homeowners insurance, the repairs could deplete your savings or force you into debt. When your home is properly insured, you avoid the uncertainty. You need homeowners insurance because it protects your home, your family, and your finances from the unexpected future. When you purchase homeowners insurance, you create peace of mind and safe environment. What's not to love?


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