Homeowners Insurance

Owning your own home is a significant accomplishment. But there's also the potential for mishaps to your home and property. For this reason, insurance coverage is critical to protect your investment. Just as you have car insurance or life insurance as part of a sound financial plan, home insurance can also provide protection.

As a condition to obtaining a mortgage, most mortgage lenders and banks make homeowners insurance coverage a requirement. Even if it's not a requirement, it's a good idea to purchase homeowners insurance. Knowing that you have homeowners insurance coverage to help minimize out-of-pocket costs for a wide range of covered losses can bring peace of mind.

Home insurance coverage is available in many types. However, a standard homeowners insurance policy does not cover every conceivable peril. It may be necessary to purchase a separate policy for particular coverage options. For additional coverage, you can also inquire about endorsements to your policy.

You always want sufficient casualty insurance. So, understanding your options for coverage and insurance rates that fit your budget is essential. Read on to learn more about products available from home insurance companies, including what's typically covered and the insurance company's obligations to policyholders.

Standard Areas Covered by a Homeowners Insurance Policy

The best way to know the details of your policy is to read it. Another way to obtain the answers you seek about your liability coverage, exclusions, policy limits, and personal property coverage is to ask your insurance agent. You can determine what's covered by your homeowners insurance. Speaking with a knowledgeable insurance attorney can also help.

The number of insurance agencies and companies can be overwhelming. Several standard areas are covered by a homeowners policy, regardless of where you purchase insurance. But they may be called by different names. Standard policies typically include some of the same coverage.

Dwelling Coverage

Dwelling coverage protects your house and any structures attached to your home. These structures may include:

• Garages
• Decks
• Fences
• Patios

The typical policy covers your home when various perils damage it. "Perils" means causes of loss. Dwelling coverage does not protect your home from every peril, though. For example, the following causes of loss are typical exclusions from homeowners policies:

• Damage from insects
• Flood
• Faulty maintenance
• Earthquake damage
• Wear and tear or gradual damage

It's important to know what is covered or excluded in your policy or the policy you're considering purchasing. Remember to purchase enough coverage that will allow you to cover the replacement cost for rebuilding your home.

Other Structures

Other structures coverage provides coverage for structures not attached to the home. Such unattached structures may include the following:

• Detached garages
• Barns
• Utility sheds
• Playground equipment
• Swimming pools and spas

Some policies cover other detached structures. It's essential to check with your agent and read your policy to determine what other structures are covered.

Personal Property

Personal property coverage protects your personal belongings in your home or elsewhere. A rule of thumb is that personal property coverage is generally 50% to 70% of your insurance on the house's structure. This type of coverage covers things inside your home that may include the following:

• Furniture
• Appliances
• Clothing
• Sporting equipment

Coverage is subject to limitations and exclusions. Certain personal belongings with significant value may require special protection. You can schedule personal property. This is when you purchase optional coverage to your home policy.

Common high-value items scheduled for additional coverage include the following:

• Fine jewelry
• Collectibles
• Fine art
• Furs
• Fine silverware

They could be covered under personal property coverage but require additional property insurance to cover those items fully.

Loss of Use

This coverage provides the cost of additional living expenses while your home is repaired. This coverage also applies if the home is unusable. The loss of use must result from an event covered by the policy. Additional living expenses typically include the following:

• Food
• Housing
• Living expenses
• Transportation

These expenses due to a covered loss must exceed normal expenses for these living expenses. For example, this coverage takes care of restaurant meals, hotel bills, and other costs while your home is being repaired or rebuilt, subject to limits and restrictions.

Personal Liability

Suppose you are personally responsible for causing damage or physical injury. Personal liability coverage pays the costs for legal defense and any judgment or settlement for covered incidents.

Personal liability coverage would cover accidental injuries sustained by others while on your property — such as a slip and fall in your home. However, this coverage would not include excluded situations, such as if you are responsible for intentional injuries.

Medical Payments

When someone sustains an injury on your property, medical payment coverage can help. It provides quick payment for medical expenses for minor injuries. However, this coverage does not provide medical payments for family members. For example, if your child and a neighbor were injured while playing in the backyard, only your neighbor's emergency room expenses would be covered.

What's Excluded From Basic Homeowners Insurance?

As discussed in the sections above, homeowners insurance can cover a range of perils. It can cover you for damage caused by lightning, tornadoes, fire, wind storms, and hail.

However, you may need to purchase separate coverage if you live in a high-risk area for a given type of natural disaster, such as wildfires. And you can purchase a flood insurance policy or earthquake insurance to cover these risks. A homeowners policy can cover water damage caused by plumbing or heating issues within the home, along with theft and vandalism.

Additionally, if a policy provides coverage for personal property, that often includes property damaged or lost even while away from your home.

Although you can purchase additional coverage, many standard homeowners insurance policies do not typically cover certain occurrences, such as the following:

• Injuries caused by intentional acts of the homeowner
• Flood and mudslide damage due to rain, snow, and other outside water sources
• Earthquake damage

Any coverage provided by your policy is subject to the deductible selected for your insurance policy.

Obligations of the Insurance Company

The insurance company must provide your legal defense for covered events. The attorney they select will represent you against the injured party. However, the insurance company may not have to pay the damages for claims not covered by your policy.

Insurance companies must also abide by your state's insurance laws. They must act in good faith as part of their contract with you. This includes:

• Making a good faith investigation into claims
• Abiding by state laws regarding marketing practices
• Adhering to laws regarding underwriting policies
• Following state law concerning rate-setting procedures

Each state also regulates how insurance companies cancel or refuse to renew a homeowners insurance policy. Usually, the company can only cancel your policy for the following reasons:

• The policyholder fails to pay premiums
• The policyholder provided false information on their application, or if the level of risk assessment has changed significantly

Insurance companies can usually refuse to renew your policy once the policy term expires. In either case, the company must give you appropriate notice according to your state's laws.

Dealing With a Denied Insurance Claim

If you've filed a timely claim under your homeowners insurance policy, but the insurance company has denied your claim, you have a few options. You can try to resolve the issue with the company. You can send a rebuttal of the denial clarifying why your claim should be covered. Examining your policy can provide justifications based on its language.

Your insurance company must pay for legitimate claims covered by your policy. If you believe they have denied a legitimate claim, you may be able to file a lawsuit against the insurance company. Typical claims include breach of contract and bad faith. Lastly, you can file a complaint with your state's department of insurance. They help regulate the insurance industry.

Having Trouble With Your Homeowners Insurance Policy? Speak With an Attorney

With your home and personal belongings at stake, homeowners insurance can mean the difference between a devastating loss and a manageable inconvenience. However, not all policies provide the same coverage. Some insurance companies may even try to deny legitimate claims. If you're having issues with your homeowners insurance, speak with a knowledgeable local insurance attorney who can help protect your interests.