What Does Homeowners Insurance Cover?Homeowners insurance is intended to protect you in the event of catastrophic loss or damage to your home. Your policy will cover the structure of your home and any additional structures on your property, the possessions in your home, costs for living expenses if you can’t live in your home due to covered damages, and harm to others that is caused by you, a family member, or a pet. Although most people feel better knowing that their home and property is insured, surprisingly few take the time to investigate the particulars of their policy in order to know exactly what kinds of damage are covered or not covered. In time of crisis, the last thing you want to hear from your insurance company is that your policy does not cover this particular loss, so it’s important to investigate ahead of time in order to allow for purchase of additional coverage if necessary. Standard homeowners insurance policies will cover common natural or man-made disasters. Covered natural disasters include fire and smoke damage caused by lightning or accident, wind or hail damage during a storm, volcanic eruption, and structural damage caused by the weight of ice, sleet, or snow. Other instances covered may be man-made disasters such as vandalism, theft, or riot or they may be unavoidable accidents such as explosion of a gas range or aircraft or vehicular collision. In addition to standard coverage, many policies will also cover damage due to a falling object such as a tree limb or a piece of construction equipment, frozen pipes or heating/cooling appliances, steam damage from a faulty hot water heater or other appliance, water damage due to plumbing malfunctions, and damage from a sudden artificial electrical current. You should check with your insurance company if you are unsure about whether these items are included under your policy. There are some damages that your homeowners insurance policy will not cover. The most common of these is flood damage. If you live in a flood plain or in an area likely to be flooded, such as near a stream or in a valley where water from rain or melting snow could accumulate, you will need to purchase additional flood insurance. The National Flood Insurance Program provides flood insurance and you can also purchase it from select private companies. Most plans will pay to replace the structure of your home in the event of flood, but possessions will receive only actual cash value coverage, not replacement coverage. Items stored in a basement may receive less coverage than those in the main parts of the home. Earthquake damage also requires additional insurance coverage. Some companies will provide coverage for earthquakes at an additional cost, but if yours does not, you will need to purchase a separate plan. If you live in an area prone to earthquakes, be prepared to pay a high deductible. Although certain areas of the country are more notorious for earthquakes than others, earthquake damage has occurred in all 50 states, so it’s worth checking into the history of earthquakes in your area as well as what kind of coverage is available. If you live in California, you can take advantage of the California Earthquake Authority, which exists to ensure coverage to homeowners since such coverage is no longer available through many private insurance companies. Damages due to maintenance neglect are your responsibility as the homeowner and will not be covered by your insurance company. You should take proactive steps to combat mold and insect damage before it requires extensive repair or becomes a financial burden. Plan a regular maintenance program that includes treatment for mold, termites and other pests as well as any equipment upgrades so that you won’t be caught off guard. Understanding what your insurance policy does and does not cover is a vital step toward ensuring personal peace of mind both before and during a crisis. Don’t wait until disaster strikes to find out what situations will be taken care of. If you do some preliminary research and make any necessary adjustments to your policy, you can save yourself a lot of frustration, heartache, and even panic down the road.
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