Buying a home for the first time is extremely exciting. You’re starting a new chapter in your life, with property that finally belongs to you. You get to live however you want without a landlord looking over your shoulder. However, among all the excitement, you will have to deal with a whole lot of admin.
One of the constants in the life of every homeowner is homeowners insurance. Homeowners insurance coverage will ensure that a disaster won’t rob you of your most expensive asset. You will still have to repair or rebuild, but you won’t be left paying off a home that no longer exists.
Homeowners insurance does a lot more than cover rebuilding in a catastrophe. Most new homeowners are unsure what homeowners insurance covers, as the information provided by insurers can be confusing. But, if you are aware of the different types of scenarios covered by homeowners insurance, you can get a good grip of what to expect.
Here is what homeowners insurance covers.
Dwelling and Personal Property
Before discussing the specific scenarios covered by homeowners insurance, we need to define what homeowners insurance actually pays for. Coverage includes two broad categories: dwelling and personal property.
Dwelling refers to the home itself, including any added structures on the property. If your home is damaged or destroyed in one of the covered scenarios, homeowners insurance will pay for rebuilding costs.
Personal property refers to the contents of your home. This is everything you own that is not part of a dwelling structure, including clothing, appliances, electronics, furniture, and more. If your personal property is damaged, destroyed, lost, or stolen, homeowners insurance may cover the cost of repairs or replacement.
The most fundamental homeowners insurance coverage protects you in case of a major catastrophe. This is an incident in which your home itself is destroyed, along with the contents. It is important to know that not all incidents are covered by homeowners insurance. Rather, homeowners insurance covers what are called ‘named perils’.
Named perils include most unavoidable accidents and natural disasters. You will be able to claim in case of damage caused by things like fire, vandalism, wind, falling trees, and more.
There are certain common incidents not included in named perils. These are generally scenarios that are common and to be expected in your region. For example, flooding and wildfires are not covered in many places. But this does not mean you won’t be covered. You will have to get coverage from federal sources, like the Federal Emergency Management Agency (FEMA). The cost of such coverage depends on your level of risk.
Homeowners insurance does not only cover losses caused by natural occurrences. It also covers theft of personal property. Your property will be covered for theft even when it is not in your home. For example, if your phone gets stolen while you are out, you will be able to claim from homeowners insurance.
Theft is generally covered even when you are in a different country. However, you should check with your insurer before you travel to find out if you need extra travel insurance.
Is Maintenance Covered?
Every home requires maintenance on a regular basis. It is one of the struggles of being a homeowner, since maintenance issues pop up throughout the year. Maintenance is not covered by homeowners insurance, but it may be covered by a home warranty.
Not only is maintenance not covered, but a lack of maintenance could allow your insurer to refuse related claims. For example, if you have not maintained your roof and severe damage is caused in a hurricane, your insurer may be able to determine that the damage was avoidable. If so, they will not pay for repairs, even when they were caused by a named peril.
Maintenance and repairs are a ubiquitous reality for homeowners and are a responsibility you take on when buying a home. While it would be great for homeowners insurance to cover such things, insurers only provide for incidents which are not inevitable.
Homeowners insurance is crucial for all homeowners. It will cover you in many scenarios which would otherwise leave you in severe financial straits. It will not cover basic maintenance, and claims for damage caused due to a lack of maintenance may well be refused too.