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What Home Insurance Covers

What Home Insurance Covers

Have you sat down with your insurance agent to find out what your homeowners insurance actually covers?

When you put so much personal investment and energy into making a house into a home, you obviously want to protect the results of all your hard work. Thus, having the optimal homeowners insurance is critical; this policy is not only designed to safeguard your home and all your personal possessions in case of destruction or damage, but also could provide coverage if you or a family member are found responsible for any injuries or property damage to another person.

But with so much of what you value at stake, it’s surprising that so many homeowners do not take the time to understand what their home insurance policy covers, and, just as important, what it doesn’t.

In the case of home insurance, what you don’t know could end up hurting you. If you don’t realize that you’re underinsured or if you’ve misunderstood the extent of your coverage, then should a disaster strike, you could end up paying out of pocket for unexpected rebuilding expenses, for replacing damaged or lost items, for uncovered liability claims, and much more.

Illustrated house with front wall cutaway so we can see inside of home

So, to help increase your know-how about this important protection, ICNE is happy to share some general information about homeowners insurance coverages. In addition, we have provided some tips on how to talk with your agent about your home insurance and what key questions you should address together, sooner rather than later.

Home Insurance Typically Covers/Includes:

The Structure of Your Home

The Structure of Your Home means that your policy pays to repair or rebuild your home if it is damaged or destroyed by fire, tornado, hurricane, hail, lightning or any other disaster listed in the policy. However – and this is a significant however – there are exceptions that many homeowners are often not aware of, including damage caused by a flood, earthquake or routine wear and tear.

Ask Your Agent
Ask your agent to go over all coverage options with you and to help you make sure that you have sufficient coverage to completely rebuild your home and replace your possessions in the case of an insured loss. Also, work with your agent to determine if, based on where you live, you should consider additional policies to protect you from flood, earthquake, and other perils not listed in your policy.

Other Structures & Outbuildings

Other Structures & Outbuildings means that your policy probably covers not just your home, but the other structures on your property, like a garage, tool shed or gazebo. Trees, plants and scrubs are also typically covered under a standard homeowners insurance policy, but generally only up to about $500 per item.

Ask Your Agent
Ask your agent to clarify, based on your individual homeowners policy, which structures on your property are covered, in what situations, and up to what dollar amount. Remember that part of the responsibility is on you to make sure your agent knows exactly what is on your property so they can properly insure it.

Your Personal Belongings

Your Personal Belongings, meaning everything from furniture and clothes, to sports equipment and personal items are covered if stolen or destroyed by fire, hurricane or other insured disaster, but only at their current value. What “current value” means is not always readily understood, so we wanted to give you an example. Let’s say you splurged on yourself this holiday season and bought a Sony 55” Ultra HD TV for $2500.

Unfortunately, three years from now, that once state-of-the-art television is going to be passé. Thus, should you experience an insured loss years after purchasing your TV, or any other item in your home, your insurance will only reimburse you an amount that is based on the current value of such televisions and any wear and tear. In addition, this part of the policy also provides for some coverage of more valuable items, like an engagement ring, designer shoes and handbags, or antiques, but you are not going to receive their full value should they be stolen.

Ask Your Agent
Ask your agent for advice on the easiest way to create an inventory of everything in your home, which can take a lot of stress out of the claims process and move your claim along much more quickly. Also, make sure that your agent is informed of every high value item in your home and discuss whether you need to purchase a special personal property endorsement or floater to insure these items at their fully appraised value. Finally, it’s always a good idea to have your valuable items professionally appraised, and since many collectibles and luxury items appreciate as the years pass, it’s critical to have this done on a regular basis.

Liability Protection

Liability Protection includes coverage against lawsuits for bodily injury or property damage that you, a family member, or a pet, cause to someone else. This portion of your policy pays for both the cost of defending you in court and any court awards, but only up to the limit of the policy, which typically start at about $100,000. Also, it’s important to know that while this coverage would probably extend to a babysitter or yard worker injured at your home, it typically will not afford the same protection if the injured party is actually a household employee, such as a nanny, driver, or caretaker.

Ask Your Agent
Ask your agent what the liability limit is for your individual homeowners policy and, together, discuss the reasons why this may or may not be enough protection for you and your household. If you feel you should bump up your coverage, you may want to consider adding an umbrella policy, which provides broader coverage, including claims for libel and slander, as well as higher liability limits.

Additional Living Expenses (ALE)

Additional Living Expenses (ALE) pays for the additional costs of living away from your home if it’s uninhabitable due to damage from a fire, storm, or other insured disaster. This part of your policy typically covers rent, hotel stays, restaurant meals, storage fees, mileage, pet boarding, laundry, and other living expenses that you might incur while your home is being rebuilt or repaired. However, be aware that the additional living expenses covered can differ quite a bit from company to company.

Ask Your Agent
Ask your agent about the limits of the ALE portion of your homeowners insurance, which could include a dollar amount and a time limit. Also, have your agent explain exactly how your insurance carrier will reimburse expenses (hint: the normal costs of your groceries could be deducted from the cost of restaurant meals), so that you can appropriately budget.

While this overview of the key components of a standard home insurance policy can help you avoid some very common homeowners insurance missteps, there really is no substitute for sitting down with your ICNE agent to go over the details of your individual home insurance policy.

Whether you are going through the homebuying process right now or nearing your renewal period, we strongly encourage you to make an appointment with your ICNE agent to go over the details of your home insurance policy.

And, please don’t be shy about contacting us with lots of questions because making sure you understand your homeowners insurance coverage now can save you lots of time, frustration, and money in the future.

If you are ready for a more personal relationship with a trusted insurance agent who can help you with everything you need to know about home insurance, call us today at (800) 243-8134 or stop into either of our two convenient Massachusetts offices.

In addition to floods and earthquakes, here are other situations that the standard home insurance policy typically DOES NOT Cover:

  • Sinkholes
  • Damage done by a contractor while renovating your home
  • Termite Infestation
  • Damage caused by war or nuclear hazard
  • Mold
  • Home systems breakdowns
  • Service lines from the street to your house (like water, electricity or sewer)
  • Water and sewer backup

Ask your agent for help in determining the coverage exclusions that might pose the greatest risk to you as a homeowner and for advice on how to insure against these gaps in coverage. Based on this conversation, you may want to consider some of the following enhanced insurance options:

  • Scheduled Jewelry/Fine Art/Other Special Property Insurance Rider
  • Ordinance or Law Coverage to cover building code changes
  • Umbrella Insurance
  • Identity Fraud Expense Coverage
  • And More

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