What should a homeowner’s insurance policy include?

As a homeowner, it’s important to understand your insurance options. Just buying any insurance package isn’t enough; you need to understand what, specifically, is covered. Insurance can be complex — there are a lot of factors that you need to consider. You also might be pleasantly surprised regarding what homeowner’s insurance actually includes.

What is Homeowner’s Insurance?

Homeowner’s insurance is designed to protect your home and its contents. Homeowner’s insurance can cover things such as acts of vandalism, theft within your home, and unforeseeable damage to your home (such as a tree falling on your roof). Like other types of insurance, there is a deductible; if you have something stolen that’s worth $500, you might not meet that deductible. If you have something stolen that’s worth $2,000, it’s more likely that you will.

There are many expensive things that can’t be foreseen about owning a home — and these are things that your homeowner’s insurance is designed to protect you against. Your dog might bite someone, accruing medical bills; liability for such things falls under homeowner’s insurance. Someone might trip and fall outside your home, due to the darkness, and you may be found liable for their injury. Once again, your homeowner’s insurance may be able to help.

Likewise, many homeowner’s insurance policies come with some extra insurance. Travel insurance, for instance; you might not realize that a homeowner’s insurance package might refund you for hotel stays or flights that are canceled. These aren’t things that always come in a policy or even frequently come in a policy; they’re little bonuses that your insurance company might add to the homeowner’s insurance policy.

These are things that you might not be aware your homeowner’s insurance already includes. There are also things that people don’t realize homeowner’s insurance might not include.

What is “Coverage”?

In addition to your deductible amount, you have a certain amount of coverage. As an example, you might have $200,000 coverage for the physical property, $50,000 for the contents of your property, and $50,000 for liability.

If someone trips and falls down your stairs and the medical costs — somehow — amount to $60,000, you would exceed the coverage and the $10,000 remainder would be yours to pay. Likewise, if you had a big fire and lost more than $50,000 in property, you would only be reimbursed for the $50,000.

It’s important to keep a regular appraisal of your home and the property within it to make sure you have enough coverage.

What Doesn’t Homeowner’s Insurance Cover?

When you think of homeowner’s insurance, you might not think of robbery, vandalism, or personal injury. Instead, you might think of fire, flood, and earthquake. It might surprise you to find out that homeowner’s insurance doesn’t always cover this. In fact, if you’re in an area in which these issues are common, it’s likely that it doesn’t.

Sometimes, fire, flood, and earthquake insurance are already included in a homeowner’s insurance policy. Other times, it has to be added on through a rider. Homeowner’s insurance will frequently not cover fire, flood, or earthquake specifically in areas where the risk is high rather than low. That’s because the insurance policy is higher risk and therefore bears more consideration.

If you’re in an area that has a likelihood of fire, flood, or earthquake, you need to make sure that you’re covered. You should also know exactly what that coverage means. For instance, “flooding” always means water damage from external, natural sources. It does not mean interior flooding such as a pipe bursting. A pipe bursting is often covered by your insurance company, but natural flooding might not be.

What Does Your Insurance Cover?

These are all suppositions regarding what homeowner’s insurance should or shouldn’t include or cover. Your policy may be different. The best way to ensure that you have the coverage you need is to talk to an insurance agent directly and to discuss your needs and concerns. They will be able to build a package that is right for you.

When purchasing insurance, keep an eye on exactly what’s covered, the coverage limits, and the deductibles. Insurance is all about reducing risk; you might not need to sink a lot of money into your insurance for things you don’t anticipate happening, but you should at minimum make sure you have enough coverage for the event that your home and its contents are destroyed.