What Does a Homeowners Insurance Policy Cover?

What Is Homeowners Insurance?

Homeowners insurance provides financial protection for your home and personal possessions. It generally covers two types of loss: damage to property and belongings and personal liability that may arise for the homeowner.

What Does Homeowners Insurance Cover?

A house is one of the biggest investments we make. When disaster strikes at home, knowing you have homeowners insurance available to help ease the burden of replacing what you have lost can bring some much-needed peace of mind.

A standard homeowners insurance policy will pay for home repairs or the rebuilding of your home if the damage is caused by one of the perils noted in the policy. Some common perils are:

  • Fire and smoke damage
  • Weather-related damage
  • Water damage from internal sources, but not from flooding
  • Damage or collapse caused by snow or ice on the roof
  • Damage caused by motor vehicles or aircrafts

Some policies may also cover additional structures on your property such as a garage or tool shed.

Does Homeowners Insurance Cover Flood Damage?

It’s important to note that a standard policy will not cover damage from a flood. It may cover some damage from rain, but if your home is filled with water as a result of rising bodies of water, you will not be covered. A standard policy also does not cover earthquakes or everyday wear and tear in and around the house. If you live in a flood zone, you will need to purchase additional flood insurance.
Homeowners insurance will also not cover damages due to neglect – so keep up with those home repairs!

What Is Replacement Cost vs. Actual Cash Value Coverage?

When filing a homeowners insurance claim, the amount you are reimbursed or paid is dependent on whether your policy has replacement cost or actual cash value coverage. Replacement cost is what you would pay for the item at today’s cost. Actual cash value is what you would pay for a similar item at today’s cost minus depreciation. Depreciation is a decrease in value due to wear and tear or age.

The main difference between replacement cost and actual cash value is a deduction for depreciation. However, both are based on the cost today to replace the damaged property with new property. A good way to be prepared in case disaster does strike is to keep a home inventory log so you’ll know what needs to be replaced.

Does Homeowners Insurance Cover Theft or Vandalism?

Homeowners insurance does cover both theft and vandalism to your home and personal property. However, there may be a limit on how much is covered for the loss of expensive valuables. These limits are initially set as a percentage of the structure coverage and determine how much you will be reimbursed for the theft. Therefore, it’s important to set realistic limits based on the value of the items in your home; you don’t want to end up with a significant loss. Another important thing to note is that your homeowners insurance policy may not extend to your vehicle or the theft of any items from your vehicle.

If you collect valuable items such as antiques or artwork, it’s important to catalog your collection and keep all pertinent paperwork in a safe place. For high-ticket items, ask your insurance company about buying additional insurance coverage to ensure that you receive adequate compensation following a disaster.

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If the unfortunate happens, and your personal belongings become damaged and need repairs, your local Art Recovery Technologies is ready to help. Our team of experts work with you and your insurance company to return your belongings to pre-disaster condition. See how ART has helped countless clients save memories and treasured artwork for generations to come.

Were your electronics damaged in a fire or from flooding? You might be surprised by some of the electronic items our colleagues at ERS can restore. Check out their restoration services and see how they can help!