Your home insurance makes provisions to protect the structure of your home, its contents, the safety of the people in it, and any expenses you may incur while living away. It’s not all-inclusive, so make sure you know where the gaps are.
Home insurance (also referred to as homeowner’s insurance) is a vital layer of protection for your home. It’s the estimate of the Insurance Information Institute (III) that 3.5 to 4 million American homes are uninsured.
It can be a costly mistake not to have home insurance, both financially and emotionally. Most mortgage lenders will not entertain the notion of providing financing if prospective homeowners don’t take out some form of home insurance to cover their investment.
Here are the major areas of home insurance, what they cover, and where you will need to be proactive in seeking extra protection.
The basics of homeowner’s insurance
Your home insurance breaks down into four key coverage areas:
- Structural coverage
- Protection of belongings
- Liability coverage
- Additional living expenses
A basic policy will protect your home if it is structurally damaged by weather (such as wind, hurricanes, lightning, hail, or fire) or vandals. According to the III, property damage accounts for 97.1 percent of home insurance claims.
It is important to note that not everything nature throws at us is covered under a standard home insurance policy. Events such as floods or earthquakes must be insured separately if your home is in an area where these events are likely to occur. If you’re located close to a coastline, for example, factoring in extra coverage, or flood insurance, to shield against water risks is prudent and often required by your mortgage holder.
Your belongings under home insurance
When factoring coverage for your home contents, items like clothing, jewelry1, electrical appliances, and furniture are typically covered. In terms of value, personal belongings coverage usually equates to 50%-70 percent of the insurance on the structure.
Your possessions will also be covered (although to a limited degree) when they are off-premises. For example, an item damaged, lost or stolen while on vacation will have some portion of the replacement cost handled by your home insurance.
If any item is of significant value either financially or sentimentally, consider adding a separate, extra layer of protection to cover those items specifically.
The importance of liability coverage in home insurance
Home insurance also offers protection if someone is hurt or injured while they’re on your property. Additionally, if you or any member of your family (including pets) act in a way that damages a neighbor’s home internally or externally, your home insurance provides protection. Liability coverage can also contribute toward court expenses in acrimonious situations.
Liability limits may seem very significant, starting in the region of $100,000. Since this is aimed at paying the medical expenses of anybody injured on your property, it’s wise to consider extra liability insurance. Medical bills can add up quickly. Under some policies, you won’t be at fault if someone is hurt in your home; the injured party can bill your insurance company directly.
Additional living expenses
Loss of Use or Additional Living Expenses is a policy that will pay out if you must leave your home while it undergoes repair from external harm (normal wear and tear is not covered). This includes meals, hotel expenses, and rent. It is not a permanent or unlimited provision, however, so check with your insurance provider to see how long and how much is covered.
What isn’t covered by your home insurance
Burst water pipes can wreak havoc in your home. The costs to repair or replace them may not be part of your home insurance. If you’re found negligent in their maintenance against blockages and extreme temperatures, don’t expect your insurer to have your back. According to Arguello, Hope and Associates, PLLC, water damage claims are America’s second most frequently filed insurance claim, while 93 percent of all water damage can be prevented.
Nature can be brutal to a home and strike in more ways than one. You may find that in the event of a hurricane, the wind damage will be covered but simultaneous flood damage may not. Therefore, we reiterate insuring against water damage separately.
Letting your home deteriorate without proper maintenance can lead to a world of problems, and none of them will be covered by home insurance if you could have prevented them with proper diligence.
If you’re a dog owner, then the breed of your pet may hinder your coverage. Some breeds are deemed aggressive and contribute to dog bites topping the list of homeowner liability claims, so insurers are very reluctant to take them on. A few examples of aggressive breeds are:
- German Shepherds
- Dobermans
- Pit Bulls
- Huskies
- Rottweilers
While the odds are against you on these breeds being covered, some insurers might be amenable so shop around.
Acts of war or terrorism are mercifully rare. Should such extremes occur, these events are not provided for by home insurance coverage.
Sewer damage from a backup or overflow near your home is another thing standard home insurance won’t cover you for. Like flood damage, you must purchase separate coverage to protect against this costly type of overrun; $3,000 to $6,000 are typical repair amounts.
Be proactive about the condition of your home, and speak to professionals
If you wait for a problem to show itself, it may already be too late in the eyes of your insurer. They could hold you responsible for allowing the problem to worsen to the point of a claim. Not everyone is qualified to appraise their home in its entirety, so hiring a professional home inspector can help you save a lot of money down the line.
They’re trained to thoroughly survey the property and show you where your home is at risk of water, insect/pest, or electrical wiring issues. Being proactive will not only impress your insurer but it could also prevent the worst-case scenario.
No matter your living conditions or the time of year, contacting a qualified insurer is always a smart decision. At NICRIS, we’re dedicated to ensuring you receive the right home insurance for your needs. Your individual circumstances are unique and so are the kinds of coverage and preventative solutions that will help keep you safe. One-on-one time with a professional will help you explore every option and assess every possible risk. Get in touch with us at 516-544-0006 or through our online form.