Home insurance is a safety net homeowners need to protect their property and finances from damage and loss. Most homeowners know it’s required, but not everyone knows what their coverage includes. Standard home policies cover interior and exterior damage to the house from things such as fire, hurricanes, lightning and vandalism. Are you fully covered? Brush up on your home insurance coverage knowledge with these tips.
What Home Insurance Covers
A standard basic policy, a HO-3 policy, provides the following coverage at no additional cost:
- ordinance coverage for costs to bring a property to code after a loss such as a fire
- refrigerated item coverage to replace spoiled food after a power outage
- liability coverage that protects homeowners from things like being sued for libel or slander
- dog-bite protection that pays if homeowners are sued when their dogs bite someone
- coverage for damage caused by falling objects like satellite debris
- snow damage and damage from burst pipes
- personal property coverage for members of homeowners’ families such as college students living in a college dorm
What Home Insurance Does Not Cover
Many homeowners may not realize that their standard home insurance doesn’t cover flood damage. Flood insurance is a separate policy from homeowners insurance under the National Flood Insurance Program.
Some other things that standard home insurance doesn’t cover include:
- earthquake damage
- maintenance, replacement, or repairs, even for major home systems such as furnace and central air conditioning
- damages from a break in water or sewer lines
- damages from mold
- damages from termites or other insect or vermin infestations
- pets stolen from or injured on the homeowners property
Tip: According to Realtor.com, depending on your provide, many home insurance companies offer an average of 5 to 15 percent discount off your insurance policy cost for having a home security system installed.
Other Things to Know About Home Insurance
While searching for legitimate and trustworthy home insurance providers, make sure to do the following three things:
- Check their licenses with your state’s insurance department.
- Check their financials with top credit agencies such as Moody’s or Standard & Poor’s.
- Ask for referrals from family and friends who can tell you about their experience with the insurance provider.
Different types of home insurance include:
- Actual Cash Value: Actual cash value policies replace the current market value of your house and belongings after depreciation, not their actual purchase price.
- Replacement: Replacement value policies cover actual cash value without deducting for depreciation.
- Guaranteed Replacement Cost: Guaranteed replacement cost policies are comprehensive policies that pay for repairs or rebuilding costs at current costs even if it goes over the policy limit.