homeowners insurance coverage types

What Does Homeowners Insurance Cover? (Explained)

What Does Homeowners Insurance Cover? (Explained)

what does homeowners insurance cover

The most uncertain fact in life is what may happen in the next second or the next moment. Life is unpredictable, and that's why people are admonished to live their lives to the fullest.

This is because one can never tell what might happen next.

Life may be there this minute and will suddenly be gone in the next, which happens to other things in life like, say, properties.

Imagine a property bought for thousands of dollars getting destroyed in a moment. This can cause several losses for the owners and impoverish them. Such disasters necessitated the origin of insurance.


What is Insurance?

Insurance is an agreement between an individual who is being insured and the insurance company that guarantees payment of a certain amount as indemnity in cases of loss or damage of life or property, depending on the initial amount agreed upon.

With this process, any insured person can recover in a case of natural disasters.


Homeowners Insurance Explained

Homeowner Insurance is one of the most famous types of insurance. It covers damages to the home, personal belongings, and other properties.

The insurance can also extend to other factors that might destroy properties but weren't listed, for example, flooding and natural disasters like cyclones.

what is homeowners insurance

Home in this context does not just mean the roof directly over your head. It represents your valued assets that can't easily be replaced when destroyed. This is what makes this type of insurance very vital to every person with such properties.

Homeowners Insurance can also protect an individual in cases of accidents or when they destroy properties.

The insurance process provides the following functions to their insured personnel:

  • Aids them in repairing their house, personal space, and other structures within the vicinity
  • Aids in replacing personal belongings like clothes, furniture, and other valuables inside their homes
  • Cover liability incurred by the insured when they damage any other property, even if the property is not theirs


What Does Homeowners Insurance Cover?

Establishing the boundary of the properties that homeowners insurance covers will help you to make the right decision when pitching for it. This will enable you to determine whether it’s worth going for or not.

The insurance covers the following liabilities:


Personal Dwelling

Homeowners insurance will help you to repair or rebuild your house if it's destroyed or damaged by factors such as natural disasters, fire, lightning, hailstorm, and other events that must be listed in the content of your insurance contract.

Some of the insurance will also repair attached structures close to your house, such as porch, garage, and tool shed. The idea behind the agreement is that whatever is within the vicinity of your home that resembles a structure will be included.

However, the standard policy for homeowners insurance will not pay for damages caused by flood, wear and tear due to breakdown of the structure, and earthquakes. This can be renegotiated sometimes by individuals, depending on the topology of their surroundings and weather conditions.

A neighborhood plagued by a flood will not get proper insurance due to the frequency in which it happens.

Individuals that live in zones prone to such disasters, as mentioned above, will have to ask for special catastrophe insurance that will cover their loss.


Personal Belongings

The insurance will also be able to cover the personal belongings contained in your home. Some of these include clothing, furniture, valuables, and others that are either stolen or destroyed by disasters mentioned in the details of the contract.

Personal belongings consist of up to about 60 to 70 percent of the full insurance. To ensure that there is enough coverage for it, owners are advised to undertake home inventory.

homeowners insurance coverages explained

The insurance can cover items that are not stored within the surroundings of the home structures. Valuables such as pieces of jewelry, art, collectibles, and others are covered for theft but may be limited for some amount.

For full insurance of these valuables, owners will have to employ a personal property floater to help ensure the properties to their real value.

Trees and other vegetation are also covered by standard policy insurance, but the details are limited to about $500 for each item. When these trees die from a disease caused by the owner's carelessness, insurance will not be paid for them.


Liability Protection

This is done when an insured individual inflicts physical or property harm to other individuals. It also includes the members of the family of the insured.

Pets are also part of this arrangement, and that means that if a dog of the insured destroys or harms another individual directly or indirectly, the insurance will cover it. The details of this liability will depend on the amount stated in the contract.

For instance, damage to another individual will have a starting limit indicated in the contract, including legal fees for court sessions. Standard limits often start at $100,000, although, owners may decide to get a higher one that will protect them.

In such situations, they are mostly advised to obtain an excess liability policy also known as an umbrella policy. This policy ensures more coverage and extended liability.

In cases of injury to other individuals, owners can activate a no-fault medical coverage for them. This means that the individual will see their hospital bill paid directly by the insurance company. This is done to avoid liability claim lawsuits against the insured.


Flood Conditions

Insurance policy often covers damages caused by internal flooding. An example is when a property is damaged due to a flood caused by a water supply leak in the house.

Flooding conditions caused by external factors are classified in the same category as damages by an earthquake and will not be covered. This is why homeowners are advised to go for additional policy for such circumstances where external flooding damages property.



This covers the content of the house that are lost through vandalism. This process is normally covered by all risks or perils policy. The implication is that even in situations where the house is unoccupied by the owners, it will still be covered as long as they retain ownership of the place.

Exceptions to this only occur when the owner sells the house and moves.


Additional Living Expenses (ALE)

Additional living expenses are the amount covered when homeowners live outside their homes for full repairs to be done. This includes the expenses of the make-shift home-like hotel room bills, feeding costs from restaurants, and other sources that help them while their home is being rebuilt.

what is homeowners insurance

The expenses can either be below or above their normal means but covered by the insurance details.

The issue with the ALE is that it is limited by time and is always equal to the valuation of the time it will take for a destroyed property to be restored. Fortunately, the coverage of the home replacement is not touched and will remain the same.

The ALE insurance details include the payment of rent details to the insured. This means that if an individual has tenants on his property, he will be paid the exact amount he would have received if his home was not destroyed.


Credit Card Limit

This type of insurance is covered to a certain limit for all transactions done on your credit card without your authorization. This implies that in situations where the owner becomes a victim of credit card fraud, he will be repaid to a certain limit as was agreed in the insurance contract. This also covers situations where forged checks have been used to withdraw money fraudulently from the owner's account.


Homeowners Insurance Deductible

Homeowners deductible is the amount the insured is supposed to reach in payments to the insurer before getting insurance claims. The amount can be in any rate or a certain percentage, say 2% of the total value of the property insured.

what does homeowners insurance cover

Owners can reduce their insurance costs by increasing their deductibles, but this will force them to spend more in offsetting costs when staking an insurance claim.

It’s now left for homeowners to choose the perfect deductible. They should, however, be careful as separate insurance claims often come with separate deductibles that may be higher. Liability claims do not come with any deductibles.



An insurance contract may not make for a good read, but each homeowner must take their time to read through the options to avoid making a costly mistake. The right insurance plan will successfully secure a homeowner for life.

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