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What Does Homeowners Insurance Cover

In the 1993 film “True Romance,” there is a memorable line about firearms protection where a character says, “it’s better to have it and not need it than need it and not have it.”
That excellent movie line could be better adapted when referencing the need to buy adequate homeowners insurance coverage.
While many aspiring and current homeowners understand the financial responsibility of securing a down payment or paying a mortgage for decades, most don’t fully appreciate the need to buy a homeowner’s insurance policy.
What’s worse is that even when homeowners do buy homeowners insurance, they are unsure what exactly is in their own policy coverage.
Being a homeowner is an awesome financial responsibility, but don’t ever allow yourself to be confused about homeowners insurance coverage. Contact the Loan Brothers at Mares Mortgage today to get the information you need.
Here is what you must know about homeowners insurance coverage and its basic coverage points
First, here is an informational primer of how much American homeowners don’t know and don’t understand about their own home insurance policies.

Homeowners Insurance Coverage Confusion

According to a 2016 study conducted by the Insurance Information Institute, about 95% of American homeowners have homeowners insurance
The problem with that promising statistic is that many American homeowners are woefully underinsured or don’t even know what their own basic policy protections offer them
Many homeowners don’t even know what kinds of coverage their home needs, even though they own homeowners’ insurance.
About 50% of Americans may be significantly underinsured relative to the kinds of coverage their own home readily needs.  A lot of homeowners may even be vastly overpaying for policy coverage plans they don’t know they don’t need.

Policy Cost Confusion

The average annual cost for a homeowner’s insurance policy is just $1,200
However, the exact amount that you might pay for a homeowners policy varies from person to person.
What’s important to keep in mind is that the amount you pay for homeowners insurance depends on where you live and your relative local underwriting risks. For example, you could pay as much as $4,445 for homeowner’s insurance in Oklahoma
Unfortunately, about 30% of Americans believe that homeowners insurance is a lot more expensive than it really is
About 41.5% of homeowners had no clue that their annual premiums would be significantly lower if they bought and bundled their homeowners and auto insurance policies from the same provider.
Now that you understand the basic picture of homeowners insurance coverage confusion, it’s time to discuss what a basic policy actually covers.
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What Does Homeowners Insurance Cover?

home interior
Homeowners insurance is a form of coverage policy that is designed to cover your house against potential damage risks, personal theft, and accidents.
What is covered in your standard homeowners insurance coverage policy is relative to where you live, your home’s age and its market worth, and the potential damage risks your home could face in the future
No two basic policies are the same. What is considered basic coverage in your policy could be radically different in another’s homeowner’s policy
Here are some points that a standard homeowner’s policy might cover.

Home Repair and Rebuilding

Most basic coverage policies will pay to rebuild or repair your home in the event of damage or destruction caused by specific events explicitly detailed in your policy contract. 
There are numerous property damage exemptions that may not be covered in your policy. For example, you may be eligible for a policy payout if your home was damaged or destroyed by fire, lightning, hail, hurricane, or other very specific property damage threats
However, most basic homeowners’ insurance policies don’t cover flooding, flood damage, or earthquakes (much more on that later).
Additionally, most homeowners’ insurance policies will also cover various detached structures like tool sheds, gazebos, or garages.

Loss of Use

Loss of use is an insurance industry term meaning that your insurance company will reimburse your cost of placing your family in temporary housing if your home becomes uninhabitable.
Remember that the loss of use clause is only viable if your home becomes uninhabitable due to clause stipulations in your contract

Various Personal Belongings

Any personal belongings that are stolen or destroyed in a fire or other contract-stipulated disasters are basically covered in standard homeowners’ insurance policies.
However, the amount of potential coverage payout paid due to loss of personal belongings may only be commensurate to 10% to 70% of the policy’s value depending on your policy
If you have extremely expensive belongings, like fine art, jewelry, furs, and so on, they may be covered but only to a fractional percentage of their value.
Make sure that you take an exacting home inventory of every item of value in the home to validate potential claims in the future

Basic Liability Protection

If you, members of your family, pets, or a technical fault on your property causes injuries or property damage to others, then liability coverage protects you from lawsuits and paying for legal defense.
For example, if a tree on your property falls onto your neighbor’s vehicle on their property, homeowners insurance liability protection should have you covered.
Most liability protection coverage limits start at $100,000, but that is not a standard amount.  
Please keep in mind that your liability protection clause won’t pay for injuries or damages you or your family inflict on each other or your property.
You should also understand that there are many policy exemptions when it comes to homeowners insurance.
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Homeowners Insurance Coverage Exemptions

insurance coverage
Most basic homeowners insurance policies are notorious for not covering damage caused by earthquakes, exterior flooding, damage caused by power failures, intentionally caused neglect and damages, living in danger zones, and “acts of God.”
Additionally, due to loopholes in policies, your coverage may only pay you for the lesser amount of multiple acts of damage caused by one uninsurable event
For example, your policy may pay you for the window or door damage caused by hurricane winds, but not for the resultant interior flood damage caused by that same hurricane.
Make sure you fully understand what policy exemptions may be applicable to your standard homeowners’ insurance coverage before signing it.

Understand Your Basic Policy Coverage Terms

What you don’t understand about your homeowners’ insurance policy can cost you a lot in the long run.
Contact the Loan Brothers at Mares Mortgage today to learn more, protect yourself and your property. 
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