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Homeowners Insurance Basics

We all know that there are multiple types of insurance policies.  The information about each can be overwhelming and, in some cases, confusing.  The team at Abbott Insurance would like to take the opportunity to explain the fundamentals of Homeowners’ insurance policies.  Below you will find the basics of what each type of policy covers and what they do not.

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Homeowners’ Insurance: What it Covers

When you buy a home, you automatically know that you will need to buy a homeowner’s insurance policy.  What you may not know is what this insurance covers you for.  A basic home insurance package will cover a number of things.  Here are some of the things it does cover:

The Structure of Your House

Your policy will pay to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lighting or other disasters listed in your policy.  Most policies also cover detached structures such as a garage, shed or gazebo, usually for about 10% of the amount of insurance you have on the structure of your home.  A good guideline for purchasing insurance on the structure of your home is to purchase enough to rebuild your home.

Your Personal Belongings

Should anything ever happen to your home, your personal belongings could be affected and need replacement.  Your furniture, clothes, sports equipment, electronics, jewelry, and other personal items are covered if they are stolen or destroyed by fire, hurricane or other insured disasters.  The coverage is generally 50% – 70% of the insurance on the structure of your home.  Be sure to conduct a home inventory to confirm that this is enough to cover the replacement of all the items in your home.  Documenting what you have is critical to making the most out of your homeowner’s insurance protection!

Liability

Liability coverage protects the policyholder, family members and even pets from lawsuits for bodily injury or property damage that they are to blame for.  This will pay for court costs, as well as any awards you are ordered to pay in court (up to the limit of the policy).  The liability portion of your policy conveniently travels with you as well.  So, if you have an accident at a neighbor’s house or anywhere else you may travel, your policy covers you.  Homeowner’s insurance also provides no-fault medical coverage in the event someone is injured in your home.

Additional Living Expenses

Additional Living Expenses or ALE cover expenses of staying elsewhere if your home is not livable, due to damage incurred by a covered disaster.  ALE will pay for things like hotel bills, restaurant meals, and other related expenses.  Keep in mind that ALE coverage can have limits, including limits of time.  If you need additional ALE coverage, it is easy to increase the coverage if you need it.

ALE coverage limits are separate from the amount available to rebuild or repair your home.  So, even if you use up your ALE, the insurance company will still pay the full cost of rebuilding your home up to the limit of your policy.

Homeowners’ Insurance: What it Doesn’t Cover

Now that we’ve discussed some of what homeowner’s insurance does cover, it is time to talk about what it doesn’t.  You shouldn’t assume that just because you’ve purchased a policy that it covers you for everything.  It is important to read the details of your policy to determine where you may need extra coverage.  Here are some things that are not covered by homeowner’s insurance:

Floods

If you want flood coverage, you’ll have to purchase an additional policy to cover damage caused by floods.

Earthquakes

Earthquake coverage is not covered under standard home policies.  Talk to your agent to see what your options are.

Sewer Backup

If a sewer backs up into your home, it can do some serious damage.  It is also not typically covered by a standard home policy.  If you are concerned that this may be an issue for your home, experts recommend considering extra insurance that may be available as part of your current policy.

Mold

Most standard home policies either limit mold damage coverage or exclude it entirely.  You can add coverage, but it will cost you more.  The best thing to do is to keep it from growing in the first place.  If you have any flooding or a leak, get rid of the moisture as quickly as possible.

There you have it, these are the points essential to you understanding basic policy coverage for homeowners’ insurance policies.  If you have questions about homeowners or renters insurance, request a quote today!

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Bill Abbott has found that 43% of other clients are overpaying for their insurance and 26% have missing coverages.
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