Home Insurance Questions and Answers
Your home may be one of your largest investments. Homeowners insurance can help protect the house, your belongings, and your finances when an unexpected loss occurs. Here are answers to common questions about home insurance.
What does homeowners insurance cover?
A standard homeowners policy generally includes several types of protection:
- Coverage for the house
- Coverage for other structures, such as a detached garage
- Personal property coverage
- Personal liability protection
- Medical payments to others
- Additional living expenses after a covered loss
Coverage depends on the policy’s terms, limits, deductibles, endorsements, and exclusions.
How much home insurance do I need?
Your dwelling limit should be based on the estimated cost to rebuild your home—not its current market value or the amount you paid for it.
Reconstruction costs may include building materials, labor, debris removal, permits, and required code upgrades. Rising construction expenses can leave a home underinsured, so replacement estimates should be reviewed regularly.
What is replacement cost coverage?
Replacement cost coverage generally pays to repair or replace covered property with materials of similar kind and quality, subject to policy limits.
Actual cash value coverage subtracts depreciation based on an item’s age and condition. For example, an older roof or appliance may be worth substantially less under actual cash value than it would cost to replace.
Are my belongings covered?
Personal property coverage can protect furniture, clothing, electronics, appliances, and other belongings against covered losses.
Certain valuables may have special limits, including:
- Jewelry
- Firearms
- Fine art
- Collectibles
- Silverware
- Business property
- Money and securities
Scheduled personal property coverage may provide broader protection and higher limits for valuable items.
Does home insurance cover water damage?
Homeowners insurance may cover sudden and accidental water damage, such as damage from a burst pipe or failed appliance. It generally does not cover flooding, long-term leaks, poor maintenance, or groundwater.
Sewer or drain backup may also be excluded unless the policy includes a water-backup endorsement.
Does homeowners insurance cover flooding?
Standard homeowners insurance generally does not cover external flooding. Flood insurance is normally purchased separately through the National Flood Insurance Program or a private insurer.
Flood coverage may be worth considering even if your home is not located in a high-risk flood zone. Heavy rain, drainage problems, and changing weather patterns can cause flooding in unexpected locations.
Are earthquakes covered?
Earthquake damage is generally excluded from standard homeowners policies. Separate earthquake insurance or an endorsement may be available.
Earthquake policies can have separate deductibles and special limitations. Homeowners should understand how the deductible works before purchasing coverage.
What is personal liability coverage?
Personal liability coverage can help protect you when you are legally responsible for someone else’s bodily injury or property damage.
Examples may include:
- A guest being injured at your home
- A child accidentally damaging another person’s property
- A pet injuring someone
- An accident occurring away from your property
Liability coverage may also help pay legal defense costs for a covered claim.
What are additional living expenses?
Additional living expense coverage can help pay the increased cost of living elsewhere when your home becomes uninhabitable because of a covered loss.
Covered expenses may include temporary housing, additional food costs, laundry, storage, and other necessary expenses. Policy limits and time restrictions usually apply.
Does home insurance cover roof damage?
Homeowners insurance may cover roof damage caused by wind, hail, fire, falling objects, or another covered event. It generally does not cover deterioration, neglected maintenance, or ordinary wear and tear.
Some policies insure older roofs at actual cash value or use a payment schedule based on the roof’s age. Ask your agent how your roof will be valued after a claim.
What is a home insurance deductible?
A deductible is the portion of a covered claim you pay before insurance applies. Choosing a higher deductible may reduce your premium, but it also increases your out-of-pocket cost following a loss.
Some policies have separate deductibles for wind, hail, hurricanes, earthquakes, or other events. These may be stated as a percentage of the insured value rather than a fixed dollar amount.
Does home insurance cover home-based businesses?
Homeowners insurance may provide only limited coverage for business property and liability. It may not adequately cover business inventory, equipment, customers, employees, or lost income.
Depending on the operation, you may need a home-business endorsement or a separate commercial insurance policy.
What is an umbrella insurance policy?
A personal umbrella policy provides additional liability protection above the limits of your homeowners and auto policies. It can help protect your income, savings, and other assets after a serious lawsuit.
Umbrella insurance may be especially valuable for homeowners with significant assets, rental properties, swimming pools, teenage drivers, or other increased liability exposures.
How can I lower my home insurance premium?
Possible savings may include:
- Bundling home and auto insurance
- Choosing a higher deductible
- Installing smoke detectors or security systems
- Adding automatic water-shutoff devices
- Updating plumbing, electrical, or roofing systems
- Maintaining a favorable insurance history
- Asking about available discounts
The cheapest policy is not always the best choice. Reduced limits or missing coverage can create significant financial problems after a major loss.
When should I review my homeowners insurance?
Review your policy at least once a year and whenever you renovate, build an addition, purchase expensive belongings, add a swimming pool, install a wood stove, start a home business, or experience another major change.
Is Your Home Properly Protected?
We can help you understand your homeowners insurance, identify potential gaps, and compare coverage options.
Contact us today for a home insurance review.
Coverage descriptions are general. Actual coverage is determined by the policy’s terms, conditions, limits, endorsements, and exclusions.
