For most people, your home is your biggest asset. Understanding what your homeowners insurance policy does – and does not – cover is key to protecting that asset.
A typical homeowners insurance policy provides coverage for damages caused by common perils such as fire, wind and hail. Most homeowners policies DO NOT cover damages caused by flooding.
Homeowners policies typically provide separate coverage for your home, for other structures on your property, for personal property or contents in your home, and for additional living expenses you may incur if your home is damaged by a covered peril and you are unable to live in your home while it is being repaired. Also, these policies usually provide liability coverage for accidents that may occur at your home. Each of these separate coverages will have a separate policy limit – that is, the dollar limit the insurance company will have to pay in the event of a loss (minus a deductible if you have one).
It is very important that you periodically review your policy limits to make sure that you have enough coverage to replace your home and its contents in the event that they are totally destroyed. If you have made additions or renovations to your home, you may want to have your home appraised and upgrade your insurance coverage to reflect the increased value of your home. Your insurance agent can assist you with this.
Most homeowners policies exclude coverage for damage caused by certain perils, such as flood, termites or settling. A homeowner’s policy may also exclude coverage from damage caused by a covered peril, such as wind, if that damage is also caused in part by an excluded peril, such as flooding, and the damage from wind and the damage from flooding occurs “concurrently,” or at the same time. You should consult your homeowners policy, under the section entitled “Exclusions,” to find out what your policy does not cover.
Keep your homeowners policy, other insurance policies and an itemized list and photos of your personal property, such as furnishings, clothing and valuables, in a safe place, such as a safe deposit box. Some homeowners periodically videotape and/or photograph their home and personal possessions as a precaution in the event of a future loss. If your home is damaged, it is prudent to immediately call your agent, broker or insurance company about filing a claim. The “Declarations” page of your insurance policy may provide a toll free number that you can call to make a claim directly with your insurance company.
In case of damage to your property, you can document the damage by:
• Taking photographs and video of all damages to your home, additional structures and personal property or contents.
• Making a list of all personal property or contents that were damaged, along with their age and estimated value.
• Saving all estimates and receipts for repairs made to your home and other structures and for replacement of your personal property or contents.
If you have to evacuate your home, save all of your receipts for food, lodging, travel and other additional living expenses.
A homeowners insurance policy is a legally binding contract between the homeowner and the insurance company, and the terms of this contract can be difficult to comprehend. If you have questions about certain terms and conditions in your insurance policy, consult your agent or an attorney who has experience with these types of contracts and the laws that apply to them.