What is Homeowner’s Insurance and What Does it Cover?

Homeowner’s insurance provides cover in the event that your home or belongings are damaged, but it goes much further than that and may provide you with more coverage than you realize. In this guide, we’ll look at the many things that homeowner’s insurance covers, some of which may come as a surprise

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What is Homeowner’s Insurance?

Homeowner’s insurance provides coverage that protects your home and the contents within. The term is used to describe a series of different policies and protections, including:

  • Dwelling Insurance: Provides coverage for your home and pays for damages to its structure, such as those arising from fire and subsidence.
  • Outside Coverage: Pays for costs and expenses resulting from someone else hurting themselves in your property.
  • Liability Insurance: If a court rules that you are responsible for an accident involving your home, liability insurance will cover the legal costs and medical costs.
  • Personal Property Insurance: Covers the items in your home, including furniture, electronics, collectibles, clothes, and more.

Cost of Homeowner’s Insurance

The average cost of homeowner’s insurance is between $1,100 and $1,300 a year, but the actual amount depends on your coverage, state, and house. 

If you skip on some of the coverage you can reduce your premiums to just $500 a year. In any case, these premiums are added to your monthly payment and paid along with your mortgage, taxes, and private mortgage insurance.

What Does Homeowner’s Insurance Cover?

A comprehensive homeowner’s insurance policy will cover you for a plethora of negative outcomes. The exact coverage will depend on your policy, so make sure you check the terms in advance or thoroughly read through your contract. However, this is generally the coverage you will find:

Injury Liability

If someone else is injured in your home and you are at fault, you could be covered for medical expenses. You are liable, which means liability insurance will cover you. And the best thing about this insurance is that the injury doesn’t even need to take place in your home.

Even if the injury occurs outside the home, as long as you are the one at fault then your homeowner’s insurance will provide the cover you need. It’s not just medical expenses, either, as liability insurance will also cover you for legal bills and even funeral costs.

You may wonder how someone could be injured in your home to this extent, but there are actually many scenarios. For instance, many personal injury lawyers specialize purely in dog bites and cat scratches as there is a lot of money to be made. 

This is something that your homeowner’s insurance will cover you for, ensuring you’re protected in the event your pet attacks someone and the victim’s legal representative files a claim against you.

This is a type of insurance that most businesses have as it protects them from outside claims. Such claims are becoming more common as we live in a very litigious society, making protection like this essential for many homeowners. This is especially true if you work from home or invite a lot of people into your home.

Inside and Outside

Your home is protected by damage from theft, fire, and storms. If, for instance, lightning strikes your roof, hailstones break a window or a strong windstorm rips some of the structure away, your homeowner’s insurance will cover you.

Not only is the interior of your home protected against damage, but you will also be protected for damage to your deck, garden, and garage. If there is a fire, storm or other serious damage, or if your garden ornaments are stolen or vandalized, your homeowner’s insurance policy may offer protection.

Natural Disasters

This is a contentious issue and it’s something that you need to pay close attention to when applying for homeowner’s insurance. Many policies will cover you in the event of wind, lightning, and hail. However, they won’t provide the same coverage during floods or earthquakes.

If you live in a designated flood zone, you should look to acquire a separate insurance policy to provide you with the necessary coverage. The same applies to earthquake insurance, which is important if you live in an area with a lot of seismic activity.

In both cases, these additional insurance policies are provided by the federal government and by private insurers. They can be pricey, especially if your home is deemed to be high risk, but when you consider how damaging these disasters can be, it’s worth looking into.

Internal Water and Gas Damage

While homeowner’s insurance doesn’t cover you in the event of a flood, you will be covered for water damage that occurs internally, such as that resulting from a burst pipe. You will also be covered in the event that heavy snow damages the roof and exposes your home to the elements.

By the same token, homeowner’s insurance provides cover for fires and explosions caused by gas leaks and other combustion issues.

Vandalism

If your home is vandalized—broken windows, spray paint, fire—then homeowner’s insurance will cover the costs. The same applies to damage caused by civil disturbances, such as rioting. Probably not an issue in the middle of suburbia, but nice to know if you live in a busy part of downtown. 

Crashes

Although rare, it’s worth knowing that if a car or a plane crashes into your house, you will be covered. The same applies if your own car crashes into the home, although in this case you will only be covered for the damage done to the home or garage and not the damage to the car.

Will Your Premiums Increase with a Claim?

In some cases, your premiums will increase if you make a claim. This is true if the issue remains on the property and could, therefore, occur again. For instance, if your dog bites someone or your cat scratches someone, then you should be covered, as discussed above, but because that dog/cat remains, the liability also remains and so your premiums will increase.

Your rate may also increase if there has been a higher number of claims in your local area. These are standard changes that the insurance company uses to balance the books and ensure its underwriting process remains profitable.