Homeowners insurance is perhaps the most important type of financial and personal property insurance available to buy. Most people's assets and wealth are tied up in their homes- both the property itself as well as the personal belongings in the house. Homeowners insurance is also a requirement for homeowners with a mortgage as lenders usually specify the minimum insurance policy or hazards that must be protected against in the policy.

In this article, we look at the main things covered by homeowners insurance and some of the things that are not covered.


What is Covered?


1. Structure of the home

Your homeowners' insurance covers the cost of repairing or rebuilding your home if it's damaged or destroyed by a fire n hail, hurricane, lightning or any other disaster listed in the policy. Most policies also provide coverage for detached structures like the garage, tool shed, and gazebo.


2. Personal Belongings

Your clothes, furniture, electronics, and other personal belongings are fully covered if they get stolen or destroyed by a fire, hurricane, hail, or any other insured disaster.

Personal belongings coverage also includes items stored off-premises, so you are covered regardless of where you are in the world.

Expensive items like art, jewelry, silverware, furs, and collectibles are also covered, but there is usually a dollar limit if they get stolen. To get full coverage for such items, you may buy a personal property endorsement and insure the item for its full value.

Trees, shrubs and other plants are also covered but not against disease or poor maintenance.


3. Liability Protection

This covers you against lawsuits for property damage or bodily injury caused by you, your family members or your pets to other people. It pays for the legal fees for defending you in court as well as court rewards to the injured party up to the limit indicated in the policy documents. If you need more coverage beyond the set limits in your homeowners' insurance policy, consider buying an umbrella policy to provide higher liability limits and broader coverage.

Your homeowners' policy also provides medical coverage for anyone other than your family members or pet that is injured in your home.


4. Additional Living Expenses

This pays for all the costs that arise from having to seek alternative residence if you are unable to live in your home as a result of an insured disaster. ALE covers restaurant meals, hotel bills and any other expenses above your normal living expenses that are incurred as you rebuild your home.


What is not covered under homeowners insurance?

1. Maintenance issues

Homes are subject to wear and tear. It is up to you to take good care of your property to maintain it in good condition for as long as possible. Any kind of damage resulting from failure to take care of your property or neglect is typically not covered under a standard homeowners insurance policy. For instance, rust, rot, mold, or insect damage are not covered.


2. Earthquakes

In most states, earthquake, sinkholes or other earth movements are not covered by a typical homeowners policy. You need to buy earthquake insurance as an addendum for an additional fee.


3. Floods and water damage

To be protected against flood damage, you need to buy flood insurance which is a separate policy that can only be obtained from the National Flood Insurance Program.

Other kinds of water damage such as overflows or backups from the sewer system are not covered by a standard homeowners insurance policy. You will need to add a separate endorsement for that.