Exploring What a Homeowner’s Insurance Policy Covers

The protections offered by a homeowners policy vary from insurer to insurer, but some of the basics are the same. For example, all policies cover damage to your home and its contents. Some policies offer actual cash value (the cost of your property minus depreciation), while others provide replacement-cost coverage.

Coverage For Your Home

A typical homeowners policy covers your house, garage, and other buildings on your property. It typically also covers your belongings in case they are damaged or stolen, up to a specific limit. It may also cover expenses for temporary housing while your home is repaired from a covered loss. Some standard policies also include liability coverage, which pays medical bills and other costs for people injured on your property, and legal fees if you are sued for damages. Most home insurance policies cover damage to your dwelling from fire and other perils listed in the policy but exclude coverage for earthquakes or floods (which require separate coverage). Many insurers offer different types of policies. A common option is an HO-3 policy that provides broad coverage for a single-family home, while a cheaper alternative is an HO-5.

Other structures on your property, such as fences, walls, and sheds, usually cover up to a limit of 10% of the total dwelling coverage under your policy. Other policies include landscaping coverage, outdoor kitchens and fireplaces, swimming pools, and recreational equipment like golf carts or bicycles. That is why it is good to research and ask for the best homeowners insurance in Florida that you may need for your property.

Coverage For Your Belongings

The policy covers your belongings against damage or loss from specific perils. It also typically pays for removing or repairing items damaged by these perils and the related expenses you incur due to those repairs. A homeowner’s insurance policy differs from a home warranty, which typically only covers certain components of a system or appliance and usually requires a contract that expires after a specified period.

A standard homeowners insurance policy covers unattached structures like garages, barns, sheds, and fences and the contents of your home, such as furniture, appliances, and clothing. In addition, it may cover additional living expenses and loss of use if your house becomes uninhabitable after a covered event.

Taking inventory of your personal property is important so you and your insurer know the replacement cost of your possessions. Keeping receipts and taking photos or videos of high-value items.

Your homeowner’s insurance doesn’t cover some incidents, including damage caused by insect infestations and rodents, rust or wear and tear, and general maintenance failures like clogged drains. Additionally, earthquakes and floods require a separate insurance policy. Adding a flood or earthquake endorsement to your homeowner’s insurance policy can provide coverage for these events. If you plan to run a home business from your residence, consider obtaining approval for your homeowner’s policy that increases the limit on the business property included in your coverage.

Coverage For Liability

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Homeowners’ insurance policies typically include personal liability coverage for accidental damage to the property of others. For example, suppose your kids play soccer in the backyard and accidentally kick the ball through someone’s window. In that case, the homeowner’s policy covers up to its liability coverage limit for the damages. The liability coverage in a homeowner’s policy also helps pay legal fees and court costs if someone sues you over an incident that occurs on your property. It may also help cover medical expenses, lost wages, and other costs if an injured visitor to your home receives compensation from you under the homeowner’s policy’s personal injury protection. In addition, most standard homeowners insurance policies offer additional living expenses or loss of use coverage. This pays for temporary housing expenses while your home is repaired or replaced after an insured peril. This benefit should be reviewed carefully because these expenses can add up quickly.

Other Coverages

Many homeowners insurance policies come with additional coverages that you can purchase as endorsements or separate policy types. For example, unattached structures coverage pays to repair structures on your property that aren’t attached to your house, like a shed or fence. Other common protections include medical payments coverage (to pay for injuries incurred by people visiting your home) and personal umbrella liability, which extends the limits of your standard homeowner’s insurance policy.

The basic homeowner’s insurance policy covers the dwelling, its contents, and your personal property and liability. You set its limits, but a good rule of thumb is to buy enough insurance to rebuild your home to the same specifications as before – this may require more than your current market value. Many policyholders choose to insure their dwelling on a replacement cost basis rather than actual cash value, eliminating the depreciation that most insurers apply. However, the basic homeowner’s insurance policy does not cover damage caused by floods or earthquakes. You can typically get coverage for these perils through a separate flood or earthquake policy or by adding an endorsement to your basic policy. You can also purchase a separate windstorm and hail insurance policy to protect against damage caused by these common natural hazards. 

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