Learn what homeowners insurance covers and what it doesn’t cover
Homes. They’re not cheap. They’re an investment you need to protect. How do you do that? With homeowners insurance.
It’s always a good idea to have homeowners insurance. If you have a mortgage, it will be required. A homeowners policy is a financial safety net that provides property and liability coverage and is a good idea even if you don’t have a mortgage.
What Does Homeowners Insurance Cover?
There are six categories of coverage that are often included in standard home insurance plans.
Dwelling
Usually, this insurance provides enough money to reconstruct your house;
the home’s walls, flooring, windows, porch, attached garage, and any associated structures are all covered.
Other Structures
Typically, this insurance pays out 10% of the housing coverage for damages and includes any separate buildings on your land, such as a fence, a shed, or a detached garage.
Personal Property
This coverage typically covers 50% to 70% of dwelling coverage and can help pay to repair or replace belongings that are stolen or damaged in a covered event, such as clothes, furniture, electronic devices, and appliances.
Loss of Use
The loss of use part of your homeowner’s policy, sometimes known as “extra living expenditures,” can be helpful if your house is too damaged to live in. While your home is being restored, this policy helps cover temporary living costs (hotel stays, dining out), typically paying out 20% of the dwelling coverage.
Personal Liability
This insurance pays if you injure someone or cause property damage unintentionally or through neglect. The coverage generally extends to anyone in your household, including pets, and can pay roughly $100,000 to $500,000.
Medical Payments
If someone is injured on your property, regardless of who’s at fault, this coverage pays if you, a family member, or a pet injures someone elsewhere. This payout usually ranges from $1,000 to $5,000.
What’s Not Covered By Homeowners Insurance
Even the most comprehensive homeowners insurance coverage will not cover everything, but there may be additional policies you can add for:
- Flooding, including drain and sewer backup.
- Earthquakes, landslides, and sinkholes.
- Infestations by birds, vermin, fungus, or mold.
- Wear and tear or neglect.
- Nuclear hazard.
- Government action, including war.
- Power failure.
Get the Right Coverage
According to NerdWallet, the average cost of homeowners insurance is $1,784 per year. However, depending on your region and the level of coverage you get, rates might vary dramatically.
It’s important to talk to various insurance agents to see what they recommend for coverage. Discuss how you use the home, who is typically in or around the home, and your budget requirements.
