Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Oct 26, 2021

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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, depending on any exclusion listed on your homeowners policy.

What is covered by your homeowners policy? 

– Your house, referred to as the main dwelling, and any attached structures – your garage for example. Though you’ll want to double check that this covers a detached garage. Sometimes it only applies if it’s attached to the place of residence, which means the house.

– 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. This can sometimes be listed as personal property.

– 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 expenses and protect you and your insurer from lawsuits or any claim made against you. Medical bills can be quite pricey depending on the situation. Though double check with your policy to see if there are any limits of liability attached. If you think you may need broader coverage, you can always change this with your provider.

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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 and find out if you should purchase additional coverage.

– Flood: Unless you specifically purchased a flood policy, you do not have flood coverage off the bat. This is one of those instances where you may have seen this included in the purchase of a home; that means that the home is at risk for flooding and that form of coverage is required to avoid high costs of water 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. If your basement suffers excessive damage due to a backed up sewer, and you don’t have protection against it, you may be stuck with that repair bill for as many months or years as it’ll take you to repay it. Because of this coverage limit, you may want to figure this out before you suffer any flooding, so you’ll know what’s covered.

– Foundation damage: Available by endorsement in some cases, the foundation is oftentimes not covered. Foundation problems can be pricey.

– 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: This 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.

–Pet coverage: 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. The policy can usually be boiled down to what the owners of a home and its contents choose to insure. There may also be required coverage if you live in a certain area. You may have already heard of tornado or earthquake coverage if you live in areas that see those sorts of natural disasters.

You may also see ‘perils coverage’ floating around, but this doesn’t apply to natural disasters. This is usually applied to events such as theft or vandalism.

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. Your homeowner policy exists to take care of you and your home, which means you may want a firmer understanding of everything this entails.

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