Your home is one of the most valuable assets you own—so it makes sense that you would want to keep it well protected. That’s where knowing about Homeowners Insurance and choosing the right policy comes in.
What is homeowners insurance?
Homeowners insurance typically covers your dwelling, other structures on your property, personal property, personal liability, medical payments to others, and loss of use costs. You pay a monthly premium, and in exchange, the insurer offers you financial protection in the event that there’s damage due to a covered “peril.”
Homeowners insurance doesn’t just apply to the physical structure of your house. It also covers your belongings. Things like your bicycle or your laptop, even when you’re not at home. It also has your back in the case of accidents on your property which might lead to legal action.
What’s covered by homeowners insurance?
It covers your home
Dwelling coverage (Coverage A) is the centerpiece of a homeowners insurance policy. If your physical home is damaged or destroyed, dwelling coverage could help cover the costs to repair or even rebuild it. There will also be some exclusions to what’s covered by your dwelling coverage. For example, it’s common for things like damage caused from flooding, mold, and earthquakes to not be covered by your policy.
It covers other structures on your property
Referred to as ‘Other Structures’ coverage, or Coverage B, this part of your policy covers assets on your property that aren’t connected to your home or built into your property’s foundation. Basically, if it’s not attached to your home, didn’t sprout from the ground, and is a part of your property—it’s covered under Coverage B.
It covers the stuff you own
Personal property coverage (Coverage C) protects your belongings from certain named perils. Anything from your Peloton to your laptop or living room couch would fall under Coverage C. Coverage C also travels with you when you leave the house. If you lock your bike in front of a local coffee shop and someone blasts through the chain, you’d be able to file a claim for the theft.
It covers situations in which your place becomes uninhabitable
If unexpected damages force you out of your place for a period of time, your Loss of Use coverage (Coverage D) comes into effect to cover the additional costs connected to temporarily living outside of your home.
Coverage D will help foot additional expenses related to hotel lodging, takeout, laundry, and parking. It’s important to note that certain situations won’t make you eligible for Loss of Use on their own. For instance, if you lose power, or your pipes freeze—without any additional damage to your property—this would not be sufficient to activate Loss of Use coverage.
It covers you (and others on your policy) when you’re in a legal bind
Personal Liability coverage (Coverage E) defends you in scenarios where you you might be legally vulnerable. For instance:
You’re sued because someone got injured on your property
You, or someone else on your policy, is sued for damaging someone else’s property or stuff
You’re faced with legal fees for accidents for which you (or someone else on your policy) are at fault. This only covers injury to others—not yourself, and not to people listed on your policy.
What isn’t covered by homeowners insurance?
The following perils are found under the exclusions section of every standard homeowners insurance policy. This means if your house or another structure on your property is damaged due to any of the following, your home insurance company won't cover the cost of repairs.
Mold
Sewer backups
Infestations (including bed bugs)
Swimming pool accidents (depending on your state)
Wind damage in certain hurricane-prone states
Wear and tear
Damages related to construction work
Certain breeds of dangerous or aggressive dogs
Stolen cash (over $200)
Nuclear hazards.
Your basic homeowners policy protects your electronics and appliance against certain “perils,” but not against every type of damage. For instance, if your washing machine has an electrical failure, your base policy wouldn’t help.