Buying insurance is something most people do in the process of buying a home. Many people tend to shop by price rather than coverage. While some might be satisfied with the least expensive coverage they can find, most people would be surprised to learn about some of the scenarios that would not be covered. TD Ameritrade divides property insurance coverage into four categories including home structure, belongings, living expenses and liability. However, the finer details of each of these kinds of coverage are not necessarily all inclusive.
Flood
Standard homeowners’ insurance policies do not cover flood damage. The only possible exception would be in the case of flooding caused by a pipe bursting. To cover themselves against flood damage, homeowners will have to add flood insurance to their coverage. Flood insurance can be purchased from the National Flood Insurance Program through an insurance agent. Most mortgage programs require homeowners to purchase this insurance for homes located in flood-prone areas. For homes not in flood-prone areas, homeowners can opt to purchase this coverage inexpensively.
Earthquakes
Damage caused by the earthquakes and shifting of the earth would not be covered under a standard insurance policy. However, earthquake insurance is available in all states and does cover sudden shifting events. However, gradual settling, sinkholes, and other causes of settling are not covered by this insurance. Coverage for these types of events is available in some states but can be very difficult to find in others.
War
Virtually all insurance policies exclude damage due to war from coverage. This means that if you lose your house or experience damage to a domestic war, you will not be covered. There is no coverage available for this. This exclusion does not include terrorism. Some state require insurers to cover homeowners against terrorist acts. Your agent can tell you the specific laws in your state.
Maintenance
While roof damage due to a windstorm is covered under most insurance policies, roof damage due to age or wear and tear is not. Electrical problems, plumbing problems, problems caused by tree roots or branches, and damage to the paint are examples of non-covered repairs. These are considered maintenance issues. If a tornado uproots a tree and causes it to put a hole in the roof, the repair would be covered. However, if the tree branches damage the shingles over time, this would not be covered because it would be caused by a maintenance issue rather than a wind event or a fire. To protect themselves against high maintenance expenses, homeowners can purchase home warranty protection. Varying levels of protection are available. This is fairly inexpensive, but it does have to be renewed every year.
Valuables
Standard insurance policies limit coverage for each type of belonging such as furniture, jewelry, electronics, and other items. Coverage is based on replacement costs, with depreciation considered. Homeowners should study their coverage limits and review their coverage with their agents every year. In some cases, even landscaping is covered as personal property. Moreover, homeowners owning $10,000 worth of jewelry for instance, should purchase additional coverage. If you are purchasing a home, or even if you already own your home, make sure you understand your coverage, and talk with your agent if you don’t. Your agent can tell you how much you could expect to receive in the event of a total loss.
Medical payments
Homeowners insurance policies offer limited protection for visitors on the property who receive injuries from accidents that occur on the property. This coverage is only available to visitors on the property and not to the homeowner or family members. This coverage also does not apply to motor vehicle accidents that occur on the property. Many insurance companies will not cover accidents caused by trampolines or by dogs that are considered “dangerous” according to statistics gathered by insurance companies. Injuries caused maliciously by the homeowner also would not be covered. This coverage is limited, and the smart homeowner will be aware of these numbers and follow the recommendations of a reputable insurance agent, to have adequate coverage in the event of accidents.
The land
Homeowners insurance covers the home and sometimes the outbuildings. However, the land the home sits on is not insured, and damage to the land would not be covered. However, trees and shrubs that add to the value of the home may be covered under personal possessions. However, damage to the land caused by oil spills, erosion, sinkholes, or falling objects are not covered.
What is covered
Homeowner’s Insurance covers damage caused by wind, hail, lightning, vandalism, theft, and fire. Vandalism and fire would not be covered if the homeowner or family members caused it. Homeowners can purchase as much coverage as they want.
Homeowners insurance offers personal liability protection to homeowners who get sued. This includes medical payments and liability payments awarded in a lawsuit. In some cases, the injuries don’t have to occur on the property.
While standard homeowners insurance does not cover everything, homeowner can protect themselves from losing their homes in most situations by taking the time to understand their coverage and working with their insurance agents to anticipate what could happen and ensure they have the coverage they need.