Homeowners insurance is a “package” policy. In that it covers both damage to property and liability or legal responsibility for any injuries and property damage policyholders or their families cause to other people. It also includes damage caused by household pets.
While it covers damage caused by most disasters, there are exceptions.
A standard homeowner’s policy does not cover flooding, earthquakes, or poor maintenance. The federal government’s National Flood Insurance Program provide flood coverage. Even though it is purchased from an insurance agent. You can obtain earthquake coverage either in the form of an endorsement or as a separate policy. Most maintenance related problems are the homeowners’ responsibility.A standard homeowner’s insurance policy includes four essential types of coverage. They include:
1. Home structure coverage:
This part of a policy pays to repair or rebuild a home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disaster listed in the policy. It will not pay for damage caused by a flood, earthquake or routine wear and tear. Most standard policies also cover structures that are not attached to a house such as a garage, tool shed or gazebo.
2. Coverage for personal belongings
If furniture, clothes, sports equipment and other personal items are stolen or destroyed by fire, hurricane or other insured disaster they are covered. Most insurance companies provide coverage for 50 to 70 percent of the amount of insurance on the structure of a home. This part of the policy includes off-premises coverage. What this means is that belongings are covered anywhere in the world, unless the policyholder decided against off-premises coverage. Coverage for expensive items like jewelry, furs and silverware usually have dollar limits if they are stolen. You can purchase a special personal property endorsement or floater and insure the item for its appraised value. If you have trees, plants, and scrubs, they too are covered under standard homeowners insurance—generally up to about $500 per item. Also covered are perils such as, fire, lightning, explosion, vandalism, riot, and even falling aircraft. However, they are not covered for damage by wind or disease.
3. Liability protection
Liability covers against lawsuits for bodily injury or property damage that policyholders or family members cause to other people. It also pays for damage caused by pets. The liability portion of the policy pays for both the cost of defending the policyholder in court and any court awards—up to the limit of the policy. Coverage is not just in the home but extends to anywhere in the world. Liability limits generally start at about $100,000. If you want more coverage, an umbrella or excess liability policy, can be added to the policy. It provides broader coverage, including claims for libel and slander, as well as higher liability limits.
4. Additional living expenses
If your house is uninhabitable due to damage from a fire, storm, or other insured disaster, this pays the additional costs of living away from home. It’ll covers hotel bills, restaurant meals and other living expenses incurred while the home is being rebuilt. Different companies provide different coverage for additional living expenses.
Types of Homeowners Insurance Policies
Types of homeowner’s policies are fairly standard throughout the country. However, individual states and companies may offer policies that are slightly different or go by other names such as “standard” or “deluxe.” The one exception is the state of Texas, where policies vary somewhat from policies in other states. The Texas Insurance Department (http://www.tdi.state.tx.us) has detailed information on its various homeowner’s policies.
When you own and live in your home, you have several policies to choose from, with HO-3 being the most popular policy. It covers the structure of the home and personal belongings including personal liability coverage. It has the broadest coverage, protects against 16 disasters or perils:
1. Fire or lightning
2. Windstorm or hail
4. Riot or civil commotion
5. Damage caused by aircraft
6. Damage caused by vehicles
8. Vandalism or malicious mischief
10. Volcanic eruption
11. Falling object
12. Weight of ice, snow or sleet
13. Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance
14. Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system
15. Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance
16. Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component)