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What Is Covered Under Homeowners Insurance?

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Joel Ohman
Founder, CFP®

UPDATED: Mar 13, 2020

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The purchase of a home is often the largest investment an individual will make in their lifetime.

So it’s a good idea to make certain it’s protected by a comprehensive insurance policy…one that won’t leave you stuck holding a bankruptcy-inducing repair bill.

If you are one of “those” people who will actually sit down and read your homeowner’s insurance policy, you should start at your declarations page.

This is usually the first page, to get a general idea of what your specific coverage types your policy contains.

For those of us who are less likely to spend a weekend reading contractual language in an insurance policy, here are the basics of what you can expect your policy to cover…or not.

What IS Covered by Homeowners Insurance

– Your house, referred to as the dwelling” and any attached structures – your garage for example

– “Other” structures, which would be your fence, or detached buildings such as a shed or barn – usually covered to 10% of the coverage for your dwelling

– Your home’s contents, or personal belongings and all appliances and electronics inside – and in some cases outside.

Your personal belongings left in a car are not covered by auto insurance. Click here to read more on that.

– The additional expenses you incur if you have to live somewhere other than your home as a result of your home being damaged to an extent where you can’t live in it. This is referred to as loss of use coverage.

– Your liability for bodily injury or property damage; whether arising out of direct negligence on your part or not.

Also, “medical payments to others” are covered up to a specified amount. Med pay is designed to take care of the smaller medical bills and protect you and your insurer from lawsuits.

What MAY or MAY NOT Be Covered by Homeowners Insurance

Homeowner’s policy forms offer many endorsements, or coverage additions (or limitations). Because of this, it is difficult to say what is not and what may not be covered.

Again, contact your agent or read your policy to determine exactly which of the following you are covered against:

– Flood – unless you specifically purchased a flood policy, you do not have coverage from flood damage.

– While we are on the subject of water, back-ups of drains and sewers are typically not covered by an unendorsed homeowner’s policy.

– Foundation damage – available by endorsement in some cases, the foundation is often times not covered.

– Wear and tear –Insurance is designed to pay for claims resulting from a peril that occurred at a single, measurable time and location. Similar to car insurance, the “stuff” that is designed to fail over time isn’t covered.

– Replacement cost for your dwelling or contents – You have the option to choose between replacement cost and actual cash value as a loss cost settlement method when you purchase your policy.

– Mold coverage is tough to come by on a homeowner’s policy as well. Some policies may come with a limited amount of coverage built in, but likely not enough if you incur a serious mold problem.

– Damage done to your home by the family pet is not covered.

The list could go on and on since there are dozens of available endorsements used to add or restrict coverage on a homeowner’s policy.

Check out the top 10 losses that may not be covered by a homeowner’s insurance policy.

And don’t hesitate to contact your independent insurance agent or insurance company to clarify exactly which coverage types your policy contains.

Read more: Who is covered under homeowner’s insurance?

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