A Look at What Homeowners Insurance Does and Doesn’t Cover

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A home is by far the biggest purchase that the vast majority of people will ever make in their lives. This is why it is critical to making sure your home is properly insured. If a home has a mortgage the lender will require that there is a homeowner’s insurance policy in place or else they will place forced insurance on the home and bill the borrower for it. As these types of policies are very expensive it makes sense in all cases to instead buy and maintain a homeowners insurance policy through one of the many insurance companies that sell homeowners insurance. 

It is important for homeowners to know what they’re insurance policy covers and doesn’t cover. This article goes into some of these details. The main perils the homeowner’s insurance covers are fire, water damage, lightning, hail, wind damage, vandalism, and theft. In addition to the home itself, the policy will also cover separate structures, such as a shed, up to 10% of what the home is insured for. 

There are two big perils that all homeowners insurance policies exclude. These are earthquake and flooding. If a homeowner wants earthquake coverage, they need to buy a separate policy. These are expensive and have very high deductibles so many people forego this coverage. Flood is purchased through a program set up by the federal government. This coverage is required by mortgage companies when a home is determined to be located in a floodplain. 

Another important coverage on a homeowners policy is liability. This coverage usually starts at $100,000 and provides the homeowner protection if someone gets hurt on the property such as by falling off a deck. Personal belongings are also covered on the homeowner’s policy with the limit usually being 60% of the home structure’s property coverage. This does limit the coverage on certain belongings such as jewelry and artwork. Additional riders can be purchased to cover these types of items to their value as determined by an assessor. 

How much a homeowners insurance policy will cost is based on a number of factors such as what the replacement cost of the home is determined to be. Another large factor is the fire protection class a home is in which is determined by how far the nearest fire department is, what their rating is, and how far the nearest fire hydrant is located. A home in Seattle, WA, for example, has better coverage and costs less than a homeowners insurance Silverdale WA which is in a more remote location. 

More about homeowners insurance can be found on a Wikipedia page dedicated to it found here. As this article details the first broad homeowner’s insurance policies were sold in the United States in 1950. They were based on these types of policies that had been available in Great Britain for a number of years. A broad policy covers a wide variety of perils. Prior to 1950, there were homeowner’s policies available that only covered specific perils with fire being the most common one.



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