What Homeowners Insurance Is and What It Covers
If you’re buying a home, you’ll have to get homeowners insurance. It’s not just something mortgage lenders require—it makes sense for anyone buying real estate. A home is likely one of the most expensive purchases you’ll make in your lifetime. And if it burns down or is ravaged by tornadoes or other natural disasters, rebuilding it can prove even more costly, financially and emotionally. Homeowners insurance can help ease your financial burden in the event of such tragedies, as well as protect you from common mishaps like broken windows and burst pipes that can cost hundreds or even thousands to repair. Sounds interesting? Here’s what you need to know about homeowners insurance.What Is Homeowners Insurance?
Homeowners insurance is a type of insurance that will compensate you if your home or personal items are damaged or destroyed due to an event covered under your policy. This insurance will also cover you in certain instances if you cause property damage or injure someone else. Homeowners insurance has a few main functions:- Repairs your yard, house, and other structures.
- Repairs/replaces your personal belongings.
- Covers personal liability if held legally responsible for damage or injury to someone else.
What Does Homeowners Insurance Cover?
Most homeowners insurance policies typically include six types of coverage.| Coverage type | What it does | Typical amount |
| Dwelling | Covers damage to the house and attached structures, such as a balcony, porch etc. | Enough to rebuild your entire home. |
| Other structures | Covers stand-alone structures on your land, such as a shed or fence. | 10% of the dwelling coverage |
| Personal property | Pays to repair/replace belongings that are damaged or stolen in a covered event. | 50% to 70% of the dwelling coverage |
| Additional living expenses | Helps to pay temporary living expenses while your house is being repaired. | 20% of the dwelling coverage |
| Liability | Pays if you happen to injure someone or cause property damage through neglect or unintentionally. | $100,000 to $500,000 |
| Medical payments | Pays to treat someone who was injured on your property, regardless of whose fault it is. Also pays if you, a family member/pet injures someone elsewhere. | $1,000 to $5,000 |
What’s Not Covered by Homeowners Insurance?
- Flooding (drain and sewer backup).
- Earthquakes, sinkholes, and landslides.
- Infestations by vermin, birds, fungus, or mold.
- Wear & tear or neglect.
- Nuclear hazard.
- Government action.
- War.
- Power failure.
