Being a homeowner is one of the cherished parts of the American Dream. Your home will offer you enormous pleasure over the years . . . provide a wonderful place for your family and friends to gather . . . keep you safe from the elements . . . and so much more.
But owning a home also brings serious responsibilities, one of which is to acquire the right kind of homeowner’s insurance. The standard homeowner’s insurance policy will provide the essential coverage you need, but there are some must-know exceptions and exclusions. Understanding what’s covered—and what isn’t—can literally save you thousands of dollars down the road.
In this post, we’ll look at the basics of a standard homeowner’s policy . . . what is and isn’t covered . . . and what you can do to power-up your policy to make it more “bullet-proof.”
The Key Ingredients of a Homeowner’s Policy
Let’s start by looking at some of the most common coverages included in a standard homeowner’s insurance policy. They include:
- Dwelling Protection . . . The house you love is at-risk from damage at any given time. But having a homeowner’s insurance policy lets you breathe more easily, knowing you and your wallet are protected if a covered loss occurs. Every standard homeowner’s insurance policy covers not only the dwelling in which you live but also structures attached to it, such as your deck or garage. Most policies also will extend your coverage to structures on your property that are separate from your home, such as fences, a tool shed, or a detached garage.
- Personal Property Protection . . . Your policy also will provide coverage for personal belongings within your house. That’s why it’s important for you to create a home inventory and to have a reasonable idea of the value of your possessions. Be sure you can tell your insurance agent the approximate value of your belongings—especially the most valuable ones. This could increase your premium, but it will allow you to be covered should your personal possessions ever be lost, damaged, or stolen.
- Natural Disasters . . . As we discussed last month, not all damages from natural disasters are covered in a standard homeowner’s policy. Damage from wind, lightning, fire, and hail are usually covered, but damage from flooding or earthquakes typically are not. (See below for what you can do about this.)
- Bodily Injury Liability . . . What if someone is injured on your property? Most standard homeowner’s insurance policies provides liability coverage if someone who is not living with you is injured on your property. This is one of the enormous benefits of your policy. It can help save you from nasty lawsuits and/or being forced to pay someone’s medical bills.
But What Can Go Wrong?
So a standard homeowner’s insurance policy can offer you and your wallet tremendous protection should things go “sideways” on your property. But it’s important to remember that (a.) Not everything is covered by a standard policy and (b.) Even those things that are covered—for example, your roof—may not be covered such that you’ll be fully reimbursed for them, should they be damaged. (This is why it’s often critical to enhance your coverage and/or attach riders to your policy. More on that below.)
Also remember that such things as flooding, earthquakes, sinkholes, and other earth movements are not covered by your standard policy. In Tennessee, you may not feel you need to worry about earthquake insurance, but—based on what happened in May 2010—you should strongly consider flood insurance. This must be purchased as a separate policy through the government-run Tennessee Flood Insurance agency.
Other things that may not be covered by a standard homeowner’s policy include:
- Maintenance issues . . . It’s crucial that you take proper care of your home because many things that result from neglect or poor maintenance are not covered. These include termites and insect damage, bird or rodent damage, rust, rot, mold, and general wear and tear. This also typically applies to mechanical breakdowns.
- Identity Theft . . . Losses related to identity theft are also not included in your standard homeowner’s policy. You need to purchase this coverage separately. (It is available from A2Z Insurance.)
- Boats Stored at Your House . . . Most standard homeowner’s policies will provide up to $1,000 of coverage if your boat is stolen from your home, but won’t cover theft from another location. Most policies also will provide liability coverage for boats with less than 25 horsepower.
- “New Economy”-Related Situations/Elements . . . We are living amid a seismic transformation in the Tennessee and U.S. economies. This includes more and more people working from home-based businesses, involved in the Gig Economy, participating in Airbnb, or working on a contract basis for revolutionary new companies such as Uber. Your standard homeowner’s policy offers little or no coverage for some of these enterprises, so you must be keenly aware of what you must do to complement your policy. (Watch for our blog post on this topic later this month.)
Make Your Policy More Bullet-Proof
As we’ve seen, a standard homeowner’s policy offers solid protection against most of the common things that can go wrong on your property. But we’ve also noted the numerous situations, conditions, and elements that policy won’t cover. To fully protect your home and your financial health, you should review important insurance riders and add to your policy those that provide the extra coverage you may need. A rider may increase your premiums from 1 to 20%, but—should disaster strike—it should be well worth it.
We know you may be worried or confused about getting the exact right coverage for your property. That’s why we invite you to call us—any time—for answers to your questions. We’re always just an email or call away whenever you need help navigating the waters of homeowner’s insurance.