Buying a home is likely the biggest financial step you’ll take in your life and one of the few physical financial assets you can have. Protecting your investment is crucial, and homeowners insurance helps you do that. Let’s dig into what your homeowners insurance means.
At its simplest definition, a homeowners policy will repair or replace your property, other structures and personal property, as well as provide personal liability protection, when a covered loss (or a peril) has occurred.
What is an insurance peril?
In insurance terms, a peril refers to an event that causes a loss. Every insurance provider may be different, but your policy documents will define what covered perils are in your specific policy. If you have damage to your property and the cause of loss is not considered a covered peril, you may not have coverage. There are often endorsements you can add to your homeowners insurance that will extend coverage to include more limits or more perils, so talking with your agent can help determine your needs.
A list of common covered perils on homeowners policies:
- Fire and Smoke Damage
- Water Damage (usually some exclusions to this one)
- Damage from ice, snow or sleet
- Falling Objects (such as a healthy tree during a storm)
- Glass Breakage
What has protection on a homeowners policy?
- Your home (this includes the inside and outside of your house)
- Structures attached to your home (such as an awning or a porch)
- Other structures (like a tool shed or gazebo)
- Personal property (the items you own, inside the home or not)
- Personal liability (for damages or injuries)
- Loss of Use
Let’s dig a little deeper into each of these…
Your home’s interior or exterior, as well as attached structures like an awning or carport, are covered under the dwelling coverage of a homeowners policy, in the event of a covered peril. This means, after you file a claim and pay your deductible, your policy’s coverage kicks in to repair or replace the damaged home or structure up to your policy limits.
Structures on your property that are not attached to your dwelling and are not considered personal property would likely fall under other structures coverage. Examples of other structures on a homeowners policy could be:
- Privacy fences
- Tool sheds
- Detached garages
- Swimming pools
While personal liability doesn’t repair or replace damaged items, it does provide financial protection for you when you’re found liable for causing damage or harm to others. Liability means responsibility. So, when you’re found responsible for someone’s injury or damages to their belongings, your personal liability coverage may kick in. If a guest slips and falls in your kitchen and you’re found liable, personal liability coverage may pay for the guest’s medical bills.
Does personal liability on your homeowners policy cover you when you’re not at home?
Your policy will define your personal liability restrictions, but typically, yes. This coverage would apply whether you’re at home or not – but if you’re driving, the liability on your auto policy would likely be the coverage applied.
Loss of Use
You may have heard of loss of use on an auto insurance policy, but what is loss of use on a homeowners policy? It works the same way in that you may be reimbursed, up to your policy limits, for expenses that exceed your normal spending when you’re displaced from your home after a covered loss. Let’s say a tornado causes a tree to fall on your house, leaving it uninhabitable. You have to stay in a hotel for two weeks during repairs, have your dog boarded and eat out every meal. Being reimbursed for these expenses would fall under loss of use coverage.
What is not covered on homeowners insurance?
Of course every policy is different, but typically a standard homeowners policy will not cover damage caused by earthquakes. Flood damage is also not covered on a standard homeowners policy – you will need to get a separate flood insurance policy if you live in an area with a high risk for floods.
If you have a valuable art or fine jewelry collection, you likely don’t have enough coverage on your personal property and you may need to consider a personal articles floater policy, as well. A standard homeowners insurance policy also doesn’t cover identity theft. And remember, it’s your responsibility as a homeowner to take proper care of your home and belongings. Normal wear and tear on your roof, appliances, etc. is not a covered peril.
Another important piece to understanding your homeowners insurance is knowing if your coverage is replacement cost or actual cash value. As always, our Alfa® agents are ready to provide you with a free quote on your homeowners insurance. They’re ready to answer any questions you may have about your policy and your insurance needs. Find a local agent today!
*This is not an insurance policy. It is intended only to provide a general description of Alfa Insurance® and/or its product lines and services. An actual policy contains the specific details of the coverages, conditions, and exclusions. Your Alfa® agent can explain the policy and benefits and answer any questions you may have before you buy.