What Does Homeowners Insurance Cover?

By Author: Frank Kasimov
Total Articles: 4717
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Now that you're a homeowner, you know that you'll need an insurance policy to protect yourself from disasters, accidents, and other mishaps. It's important to understand what exactly is protected by homeowner's insurance. At the most basic level, a homeowner's insurance policy's job is to protect four things: your home, your possessions inside the home, your wallet, and finally, your peace of mind.

Most basic homeowners policies will offer you protection from things like trees falling on your property or fire. However, other potential disasters, such as floods and earthquakes, are not covered in a standard homeowner's policy. However, there's no need to worry; you can still get some protection by purchasing separate coverage for those events.

If your possessions are either damaged from any of the covered disasters or stolen, a standard homeowner's policy can also offer some protection. However, there is a limit to how much money you can collect for damaged or stolen possessions. If you keep specific items of value in your home, you can arrange for a higher level of coverage by adding them to your policy individually ...
... and making a yearly placement to guarantee their replacement value.

While homeowner's insurance protects your wallet by covering damage to your home or possessions, it also offers peace of mind by protecting you from other high costs. Homeowner's insurance will pay out to cover medical expenses or even lawsuits that result from accidents others have while on your property. In addition, it will cover medical costs resulting from an injury you yourself suffer on your property.

Before we look at the various kinds of coverage, let's review the basics. There are basically two major sections in a homeowner's policy which are property protection and liability protection. Let's break down property protection first.

PROPERTY PROTECTION

This encompasses the area covered by the insurance and will most likely be broken down into four sections:

Dwelling

The dwelling includes the main structure of the house as well as the fixtures inside that structure, including things like heating, plumbing, and wiring.

Other Structures

This refers to any structures on your property that are detached from the house. This would include stand-alone garages, storage sheds, driveways, and fences. However, if a detached structure on your property is primarily used for business, it will require its own policy as it cannot be covered under a personal policy.

Personal Property

This is a very important part of homeowner's insurance as it covers possessions inside your own and on your property. Personal Property coverage can pay off cash value or replacement costs for these items, and it's often advisable to increase this level of protection on your homeowner's policy.

Loss of Use

This coverage helps you in the event that you cannot live in and/or access your property for a period of time. For example, if you are forced to temporarily vacate your home due to mold, Loss of Use coverage can help pay for a hotel. In most cases, homeowner's insurance will cover from one to two years' worth of expenses related to losing the use of your home.

LIABILITY PROTECTION

In addition to protecting your home, property, and possessions, a homeowner's insurance policy can help you if you are found to be at fault for an accident that occurred on your property. There are several main kinds of Liability Protection in homeowner's insurance:

Personal Liability

If you are faced with a lawsuit alleging that an accident on your property resulted in property damage to others or even bodily injury, this coverage affords you some protection. Personal Liability coverage can even extend to damage that you might cause away from your property. However, it does not cover auto accidents or business-related incidents, as those require their own separate policies.

Medical Payment

This coverage pays out to cover the related medical expenses if anybody accidentally sustains an injury on your property. This can include you and your family, as well as anybody else who may get injured on your property.

Unlike auto insurance, the law does not require homeowner's insurance. However, it is almost always a requirement in terms of getting a mortgage. More importantly, it can help you save countless dollars and offer peace of mind to you and your family.
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