What Does Your Homeowner’s Insurance Really Cover?

At the time of this post, Hurricane Isaac (now back to a tropical storm) is moving inland after hitting the Gulf Coast. As those in the path of the storm work through their emergency preparedness plans, it is a good time for the rest of us to think about what we would do in an emergency and how we would recover if our property, homes or businesses were damaged.

If you have a mortgage, your lender requires that you carry homeowner’s insurance on the property. The insurance protects your investment as well as the lender’s interest in the property.  It is important to understand exactly what is covered by your policy. Here are a few things to consider:

  • Homeowner’s insurance policies typically do not cover flood damage. While the mortgage lender may not require you to carry flood coverage unless you are in a designated flood plain, it is possible to have water damage from a heavy storm or other event even if you are not in a flood zone. Check your policy and consider adding flood insurance.
  • Many policies now have separate deductibles for different events. As an example, you may have a $500 deductible for a home break-in, but a $2,500 deductible for wind damage. Look at your policy.
  • For certain types of property, a separate insurance “rider” will be required. Most insurance carriers will not cover antiques, fine art, jewelry, boats, etc. under your regular homeowner’s policy.
  • Most insurance companies will not write new policies when known natural events are underway. As an example, if a hurricane is headed your direction, you probably will not be able to get coverage until after the event has passed.
  • If you rent, you must purchase separate renter’s insurance to cover your belongings. The property owner’s insurance will only cover the building – not your furniture or other belongings.
  • Homeowner’s insurance typically covers injury to another person on your property. This might include slip and fall injury or a dog bite injury (note that some insurance companies restrict coverage based on the breed of dog you own). Check your policy to see what is covered and what the amounts are to be certain you have sufficient coverage to protect your assets.

Reviewing your insurance coverage on an annual basis is a good idea. Your situation may change during the year, or the coverage offered by your insurance company may change. It is important to understand exactly what is covered and what isn’t before you need the insurance. Stay safe out there.

Photo shown here is a night view of the storm from space. Courtesy of NASA.

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