What’s Covered by Homwoners Insurance

Anyone who is buying a new home will most likely be required to buy homeowner’s insurance. In fact, most banks that offer mortgages on primary residences require the borrower to purchase homeowners insurance for the property every year until the borrower has completely paid off what he or she owes. Unfortunately, very few people understand exactly what kind of protection this coverage provides for them.  

Homeowners insurance will usually provide money for the repair or replacement of the structure of a house and its belongings, provided that the damage occurred as the result of specified events. While these events differ between various insurance policies, there are usually restrictions on damage that is the result of flood or intentional vandalism. This means that accidents that occur, such as a fire or gas line explosion, or acts of such as theft are covered by a homeowner’s policy.

Damage that occurs as a result of a flood is hardly ever covered by a standard homeowner’s insurance policy. Floods that are the result of big storms such as hurricanes, or even floods that are the result of an accident such as a sewer drain backing up are not covered. For this reason, it is recommended that homeowners purchase a separate flood insurance policy.

Many homeowners insurance policies will also include a small amount of liability coverage. This coverage is able to provide funds in the case that someone injures him or herself on the homeowner’s property. A homeowner’s insurance policy with liability coverage will provide money to cover medical bills and other expenses to any injured party. Liability coverage can also protect the other
assets of the homeowner in the event that a lawsuit is filed.

Homeowners insurance policies typically also provide money to a family for general living expenses such as rent, utilities, groceries, and transportation in the case that a property becomes severely damaged and unlivable. When a home becomes uninhabitable and/or condemned because of an incident like a natural disaster or an accident, a typical homeowners insurance policy will give the family enough money to obtain comparable alternate housing. After a disaster, this coverage is especially important since the amount of available rental housing dramatically drops, forcing rental prices ridiculously high. In many cases insurance money will give a family the ability to rent a house until its insured property can be fixed and made livable again.