How Homeowners Insurance Works

When was the last time you reviewed your homeowners insurance policy? Do you know exactly what is and is not covered? With every insurance plan varying in coverage and cost, it’s important to understand what your personal policy includes. Though not every plan is the same, there are quite a few aspects of insurance that all homeowners policies have in common, including common coverage, liability, and deductibles.

This article takes a deeper look into homeowners insurance by explaining the typical policy coverage that most insurance companies have to offer. By understanding what your insurance plan covers, you’ll be able to adjust your current policy so that it fits your wants and needs.

What is covered?

Standard insurance policies typically provide six areas of coverage:

• Dwelling coverage – covers sudden and accidental damages or destruction to your home.

• Other structures – Fences, detached garages, storage sheds and other unattached structures or buildings, including pools, are generally covered.

• Personal Property coverage – protects the contents inside your home such as furniture, appliances, clothing, even mundane items like toothpaste.  Personal property coverage replaces these items if they are stolen, damaged or destroyed.

• Liability coverage – provides legal representation and financial protection if you are sued and determined legally responsible for the injury of someone else or damage caused to their property.   Good policies also will protect you from lawsuits for certain civil damages you might cause others, such as slander.

• Medical expense coverage; covers the medical bills of others who are injured while on your property. This coverage can also provide indemnification for injuries to others that occur away from your home.

• Loss of Use coverage; pays for extra expenses you incur if your home has been damaged by a covered peril and you must live elsewhere while repairs are being made.

What are some common perils that are not covered, or are limited in some way?

Perhaps the most common misconception about homeowners insurance is that it will cover damages to your home under any circumstance.  Typical home insurance policies cover all sudden and accidental damage, with exceptions.

Common exceptions are:

• Wear and tear / long term deterioration / obsolescence.

• Sinkhole collapse – a hole that develops under your home or adjacent to it that your home falls into.  Typically this is seen in areas where mines are prevalent or those with sandy soil.

• Earthquake or other earth movement.

• Flood – Water that emanates from the ground that penetrates your home.

• Mold and rot – This peril typically is limited to $10,000 on most policies, but the key issue is that the mold must be caused by a covered peril.  Mold caused by a long-term, gradual problem, which is the most common way that mold occurs is not covered.

• Water backup – Water that backs up from a public drain or sump pump is usually covered for only a fixed amount between $3000 and $10,000 per incident.  Higher end policies will allow this coverage to be increased.

• Damage caused by vermin, including termites.

Seeing a long list of “things not covered by insurance” can be unsettling. At Esposito Insurance Group we encourage our customers to talk about their coverage and can often offer policies and optional coverage that fills in most of these gaps.

Visit our website to learn more and to request a free quote today, or call us to speak with a licensed agent.