Home Insurance – What it Does and Doesn’t Cover


You finally did it, you saved up enough money to get yourself your first property. Along with the excitement comes the countless items on your to-do list. At the top of that list is probably home insurance and the first step in tackling that bad boy is understanding how it works. Every home is different and every home insurance policy will be customized to fit your home. Factors that your insurance company will consider include the area and location of where the property is situated, the age of the home, the size of the home, and the value of the personal contents within the home. This information will give the insurance company an idea of what your plan should cover, how much coverage you need, and the risk level the property may pose to the company. Here is a breakdown of what is and is not covered within typical home insurance policies:

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Fire Damage

You may have heard or read of the numerous horror stories of homes that spontaneously went up in flames due to an unwatched candle or a grease fire in the kitchen. Home insurance gives you peace of mind that should a freak accident occur – you will be covered and can remedy the damage that was caused – without filing for bankruptcy. If it is determined that you intentionally started the fire or any foul play is found, this will void your policy and repairs will not be covered by your insurance company.

Experienced insurance brokers will evaluate the damage to your home and determine what the total cost to replace or rebuild the home will be. It is wise to note that the assessment of the property is based on the current market value of the home.

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Detached Structures

Not only is the structure of your home covered by your home insurance policy, but detached structures on your property are covered as well. It is important to clarify to the insurance agent what structures you have on the property to ensure they are included in the policy which includes garages, sheds, pool houses, and fences. Make sure to look at the specific events outlined in your policy to ensure that the ones common in your area are specifically stated. For example, flooding, if your home is in a flood-prone zone. If the insurance policy does not specifically cover an incident, this will apply to your detached structures as well.

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Coverage for Additional Living Expenses

Sometimes the damage to your home is so severe that it becomes uninhabitable. Where will you live? This is where coverage for additional living expenses comes into play. This coverage will help you pay for unforeseen expenses such as hotel stays, food, storage fees, utilities, restaurant bills the list goes on. Essentially these are the expenses that you would need to pay to replicate a similar life in a new dwelling.

It is wise to keep in mind that there are stipulations. For example, a candle fire causes excessive damage to your home deeming it unlivable and you are going to live in a hotel until the damage is fixed. The additional living expenses will cover all of this – but if you try to live in a 5-star hotel on Rodeo drive – this will be deemed as excessive and will not be covered.

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Personal Liability

Picture this, you are online ordering off your favorite online store. You treat yourself to some fabulous finds, patiently await its arrival and it finally arrives on the delivery truck. As the delivery driver makes their way up to your front porch they fall and injure themselves. Now, this may seem a little far-fetched however situations like this can and do occur all the time. The delivery driver may decide to sue you because your child left their toys on the front lawn. With a home insurance policy, you will be covered for the cost of their medical expenses, your lawyer expenses, and almost everything in between. Every policy has differing liability amounts, your broker will be able to guide you on an amount that will work for you and your household.

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[post_page_title]Personal Belongings[/post_page_title]

Personal belongings that are damaged due to an unforeseen event such as a fire, hurricane, or lightning are covered in standard home insurance policies. Furniture, clothing, electronics are also covered up to a certain amount which you should make sure to discuss when you are finalizing your policy.

Expensive belongings such as jewelry or high-end art pieces, may not be covered with a standard policy. Additional coverage may be required to ensure that the pricier items in your home are covered if an incident should occur. Taking photos and inventory of your belongings and disclosing the cost of the items to your agent will guarantee all your belongings are indeed covered.

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Natural Disasters

Mother nature is a fickle thing, you never know when she may strike. Almost every home insurance policy will have natural disasters listed as a covered event. These include lightning strikes, wildfires, hurricanes, tornadoes, floods, or earthquakes. Your home’s location will determine the common natural disasters that are covered. If you live in New Orleans, your plan will almost certainly cover a flood, and if you live in California your basic plan will most likely offer earthquake coverage. Policies are reliant on your location in order to evaluate risk but if you want more coverage such as earthquake insurance on your home in New Orleans, this may not be covered and you would want to inquire about an additional add-on.

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[post_page_title]To Sum It Up[/post_page_title]

You are already on the right track! By researching about home insurance beforehand such as reading articles like this, you can get the foundational knowledge you need to understand what is and is not covered in your ideal home insurance policy. As with every home insurance policy, do your due diligence, read the fine print, and determine exactly what is or is not covered.

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