Home insurance is crucial for protecting your property and belongings in emergencies. Knowing what your policy covers and doesn’t can save you from unexpected expenses. Here’s a simplified guide to understanding home insurance coverage.
What Does Home Insurance Cover?
Property Damage and Liability: Home insurance combines property damage and liability coverage. Property damage coverage helps repair or rebuild your home if covered, like fires, hurricanes, hailstorms, or lightning damage. Liability coverage protects you if someone is injured on your property or if you accidentally cause damage to your property.
Other Structures: Other structures on your property, such as fences, sheds, garages, and gazebos, usually cover up to 10% of your dwelling coverage. For example, if your home is insured for $300,000, other structures would be covered up to $30,000.
Personal Property: Your personal belongings, including furniture, clothing, electronics, and some valuables, typically cover 50-70% of your dwelling coverage. For instance, if your home is insured for $300,000, personal property would be covered for $150,000 to $210,000.
Additional Living Expenses: If your home is uninhabitable due to a covered event, your policy may cover additional living expenses (ALE), such as temporary housing, restaurant meals, and other costs. This coverage usually ranges from 10% to 50% of your dwelling coverage.
Liability Coverage: Liability coverage protects you from lawsuits if someone is injured on your property or if you accidentally damage someone else’s property. It typically involves personal liability, medical expenses, lost wages, and death benefits, with limits starting around $100,000 per claim.
What’s Not Covered?
Natural Disasters: Most home insurance policies do not cover damage from floods, earthquakes, or landslides. It would be best to have separate policies and risks.
Wear and Tear: Policies typically exclude damage from general wear and tear, such as aging appliances or neglected maintenance.
High-Value Items: Standard policies limit coverage for high-value items like jewelry, furs, and silverware. You may need additional coverage or a separate policy for these items.
Property: Your standard home insurance may not be sufficient if you rent out your property. You might need a landlord policy, which costs about 25% more than a regular policy.
Filing a Claim
To file a claim, contact your insurance agent, complete the necessary forms, and have an adjuster assess the damage. Payments can take a few days to weeks, depending on your provider and the type of claim. Keep in mind that filing a claim can increase your insurance premiums.
If you encounter issues with your insurance company, you can submit a complaint to the Consumer Financial Protection Customer Complaint Database.
Understanding your home insurance coverage can help you make informed decisions and ensure you have the protection you need for your most significant investment.
