By Bob Walsmith Jr.
Santa Barbara Association of Realtors
You’d be surprised at what your home insurance policy doesn’t cover. Here’s what is and isn’t covered by your insurance.
What does your homeowners insurance cover? The short answer is: A basic homeowners insurance policy covers your home and possessions if they’re damaged or destroyed by these things:
· Windstorm (unless you live in a hurricane zone)
· Hail (not available everywhere)
· Civil commotion
· Aircraft (and things falling from aircraft)
· Vehicles (and things thrown from vehicles)
· Vandalism (although some policies exclude this)
· Malicious mischief
· Volcanic eruption
But many states don’t allow this basic policy to be sold. Instead, you have to buy an upgraded policy that covers more perils.
Upgraded Homeowners Insurance
That upgraded policy adds protection to your home and possessions from even more perils. You get protection from everything on the list (above) plus:
· Falling objects
· The weight of ice, snow, or sleet
· Flooding from your appliances, plumbing, HVAC, or fire-protection sprinkler system
· Damage to electrical parts caused by artificially generated electrical currents (such as a power surge not caused by lightning). But damaged electronics such as computers aren’t covered.
· Glass breakage
· Abrupt collapse (say from termite damage)
That same list applies to the homeowners insurance you buy for a condominium or co-op.
The Most Complete Homeowners Insurance
The most complete and protective form of homeowners insurance covers you for all perils except some specific ones like:
· Nuclear accidents
What Homeowners Insurance Doesn’t Cover
No matter which basic policy you get, it’s not going to cover everything than can damage or destroy your home. Typical homeowners policies don’t cover:
· Bad things that happen because you failed to maintain your home (like mold)
· Nuclear accidents
· Sewer backups
· Sump pump failure
· Ground movement and holes caused by mining (known as mine subsidence insurance)
You can buy additional policies to cover some but not all of those perils.
And even if insurance is available for the most common natural disaster in your area, you may not be able to buy it if your home has features that make it vulnerable. For example, a home with unrated wood shake roof shingles may be tough to insure in an area where wildfires are common.
Other Things Homeowners Insurance Covers
In addition to covering your home, homeowners insurance also covers four more things:
1. Your outbuildings, landscaping, and hardscaping. If you have outbuildings (like a barn), landscaping, or hardscaping (like fences), your homeowners policy most likely covers those for up to 10% of your policy amount (5% for plants).
For example, if you have $100,000 in homeowners insurance and someone drives into your fence, the policy would cover 10%, or $10,000 in repairs.
Sometimes policies exclude damage to outbuildings, landscaping, or hardscaping caused by a particular peril (like wind).
2. Damage or loss of your personal belongings. Your homeowners policy covers your family’s belongings, even when you take them out of the house. If your child heads to college with a laptop and it’s stolen, that’s probably covered by your homeowners insurance policy.
A home insurance policy covers a lot of your personal belongings, but not necessarily everything.
You’ll need additional insurance if you have many expensive items like jewelry, furs, or antiques.
Policies will either state that your personal belongings are insured for replacement cost or cash value.
Replacement cost means that the insurance company will pay the full cost of replacing an item (such as the laptop mentioned above, or a sofa damaged in a fire) once you show a receipt. Cash value means the insurance company will issue you a check for the amount that the laptop or sofa would have been worth when it was stolen or destroyed.
3. Temporary living expenses if your home is so damaged you can’t live in it. When you can’t live in your home, your homeowners insurance covers your living expenses, including hotel bills and meals. But you can’t live in the hotel forever and eat lobster every night on the insurance company’s tab. Your policy will have limits on how long you stay and how much you can spend.
4. Injuries or accidents at your house. Homeowners insurance coverage includes liability – meaning it covers you when you or your family members cause injuries or damage. This coverage also pays when your dog bites someone (medical payments) or someone falls and injures themselves.
Homeowners Insurance for Older Homes
There’s another kind of homeowners insurance used when your home is so old it would be impossible to replace. It couldn’t be built like the original — that is, new electrical code wouldn’t permit the same electrical, etc.
If your home is old, but not so old that its historic, you might want another homeowners insurance coverage. A “law and ordinance” policy covers the cost of rebuilding using today’s building codes. It’s good to have if the building codes have changed a lot (for example, in Florida) since your home was built.
This article is meant to make you aware of the basics of homeowners insurance. Please contact your trusted REALTOR® for suggestions on local insurance agents that can take the time to sit down with you and craft the type of policy that is just right for you, your family and your home!
Bob Walsmith Jr. is a native to Southern California and a Realtor® with Berkshire Hathaway HomeServices California Properties in Santa Barbara. During his work with the Santa Barbara Association of Realtors, Bob has served on the CORE Committee, Education Committee, been Chair of the Budget & Finance Committee, and the Multiple Listing Service Committee. He also is on the Board of Directors of the Alpha Resource Center of Santa Barbara. Bob lives in Goleta with his beautiful wife Julie. When not working, Bob enjoys playing golf, fine wine, fine dining, and walking our beautiful coastline. Bob can be reached at 805.720.5362 and/or firstname.lastname@example.org