Homeowners Insurance: What Does It Cover?

If someone were to ask you what your homeowners insurance covers, what would you say? Chances are, you’d answer that you aren’t sure, or mention something that isn’t covered. In fact, more than 30 percent of homeowners in the country thought that flood damage was covered by a standard policy when that isn’t the case, according to a National Association of Insurance Commissioners survey.

“Many people don’t take the time to understand what is and isn’t covered and mistakenly assume insurance will pay for any type of damage,” says Carole Walker, executive director of the Rocky Mountain Insurance Information Association, an industry group based in Greenwood Village, Colorado. “We often hear from people that the only time they think about what their insurance covers is when they go to file a claim. Of course, then it’s too late.”

more than 30 percent of homeowners in the country thought that flood damage was covered by a standard policy when that isn’t the case, according to a National Association of Insurance Commissioners survey.While all home insurance policies vary, it’s important to know how you’re protected. Below is what most standard policies (most are called HO3 policies) should cover.

Ordinance or Law

This is what covers costs associated with bringing the home back up to code after experiencing a covered loss.

“If a house burned down and a new law requires homes to have sprinklers in the state of Pennsylvania, upon rebuilding, the sprinklers would have to be installed,” explains Michelle O’Connor, owner of O’Connor Insurance Associates Inc. “This coverage provides the money to do that, but there is a limit that is a percentage of the home coverage.”

In addition, if you experience a power outage and all of your food in your refrigerator and freezer goes bad, a standard policy typically provides ordinary coverage of $500 for those items.

Liability Coverage

This coverage comes into play when a client is sued for a variety of oral or written claims that insult or libel a person or business, and other items like slips and falls. It also covers dog owners, and most states offer a basic policy that won’t cost extra regarding protecting of dog bites. That’s significant because the average cost of dog-bite claims was $32,072 in 2014 alone, up from $27,862 in 2013, according to an Insurance Information Institute study. Most standard policies offer between $100,000 and $300,000 in liability coverage.

Non-home-related Miscellaneous Accidents

It’s called homeowners insurance, but sometimes it covers things that don’t directly relate to your actual home. It may also cover someone in any location, regardless of where he or she actually lives.

“For example, we collected against a woman’s homeowners policy when she drove her bicycle into our client and seriously injured her. Also, we made a homeowners claim against a man who was on a business trip and picked up and accidentally dropped a co-worker, causing her to break a bone,” says Thomas J. Simeone, a Washington, D.C.-based personal injury attorney and adjunct professor of law.

Storm Damage/Extra Living Expenses/Falling Objects

If snow causes damage to your roof, or pipes burst from the cold weather, you’re likely covered with a standard homeowners insurance policy. In addition, living expenses related to storm damage—such as if your home was damaged and you couldn’t live there, so you needed to stay in a hotel and eat at restaurants—will also be covered. Be sure to check if there are limitations on these bills, however, as some policies will restrict payment up to a certain amount. In addition, falling objects, such as a satellite that falls from orbit and damages your property or belongings, will be covered.

Child/Student Items

If you have a son or daughter who’s in college, and their personal property is damaged, it’s still covered under your policy, even if your child doesn’t live at home. Called personal property coverage, this type of coverage pertains to students living on their college campus. However, if they live off-campus, the coverage may not apply.

If you’d like to acquire flood insurance, you have the option to purchase it through the federal government under the National Flood Insurance Program. Also, a standard policy likely won’t cover earthquake damage, routine wear and tear, or basic maintenance, such as a broken air conditioner or heater.

“Flood insurance is a specific type of coverage that has to be purchased separately,” O’Connor says.

Be sure to confirm with your insurance agent what is and isn’t covered by your personal homeowners insurance policy.



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