Your home is most likely one of the biggest investments you’ll make during your lifetime. Maintaining appropriate homeowners insurance and properly filing claims when needed is essential for protecting your family’s financial and physical security. In this article, we’ll explore the basics of homeowners insurance, what losses typically are and are not covered, and how to file a timely and complete claim to cover the costs of needed repairs.
What does homeowners insurance typically cover?
Home insurance policies can often be tailored to your needs. However, they typically cover damage to or destruction of your home, loss of possessions, and personal liability for accidents on your property.
Damage to the Home
If your home suffers damage due to events like fire, storms, vandalism, or theft, your insurance provider can reimburse you for related repairs or replacement of lost property. Standard homeowners insurance policies often cover
- The structure of your home, including the floors, walls, windows, and roof
- Built-in appliances
- Attached porches, garages, and decks
- Other structures on the property like sheds, fences, and detached garages
- Loss of personal belongings such as clothes, furniture, electronics, bikes, and jewelry, and appliances that are not built in
- Loss of use (otherwise known as additional living expenses), which covers costs like hotel rooms and restaurant meals while your home is uninhabitable after an insured event
Liability coverage is designed to protect you from the cost of legal liability for harm suffered by others in connection with your property. For example, if your neighbor or delivery driver trips and falls on your property or is bitten by your dog, your policy may cover your financial responsibility for medical expenses and other related costs. It may even provide coverage if the bite doesn’t occur on the insured property.
What doesn’t homeowners insurance usually cover?
When choosing a homeowners insurance policy, make sure you understand not only what it covers but also what it doesn’t. Standard homeowners policies typically don’t cover damage due to
- Flooding from heavy rain
- Drain or sewer backups
- Power failures
- Government action
- Home wear and tear or neglect
- Nuclear hazard
Additionally, the amount of reimbursement available will be limited by the terms of your policy. Be sure you’re aware of your policy’s coverage limits, and consider purchasing additional coverage for expensive items that you want to insure for their full value.
Supplemental Coverage Considerations
Due to the limitations discussed above, you may decide to purchase additional coverage to protect against certain risks. Consider the degree and potential costs of these risks, and select insurance products accordingly. For example, if you live in an area that receives heavy rain or snow, you may want to purchase (and your mortgage lender may require) flood insurance. In the same vein, if you live in an area that can expect earthquakes, earthquake insurance is vital to protect you from loss of your home. Ask your insurer about options for additional coverage such as
- Schedule personal property for high value possessions like jewelry or musical instruments
- Ordinance or law coverage for costs of bringing the home up to current building codes during repairs or renovations
- Water backup to cover backed-up sewer lines, drains, sump pumps
- Equipment breakdown to cover HVAC systems and large appliances
- Service line protection for damage to water, electric, utility lines for which you are responsible
- Identify fraud protection, which can include associated lost wages and legal fees
- Off-premises coverage for items lost while away from the property
When do you file a claim, and how do you do it?
It’s important to file your claim promptly, but there are a couple of steps you should take before reaching out to your insurer. Your first priority should be safety, followed by preventing additional damage. It’s also useful to have a basic understanding of the terms of your policy before making the call.
Homeowners should file a claim with their insurance company as soon as possible after any incident resulting in significant damage to their home or possessions. However, do not wait for the go-ahead from your insurance adjuster before making emergency repairs that need to be done immediately to preserve your safety or prevent further damage to the property. Simply take pictures and videos of the damage and contact a professional construction company to make the necessary repairs.
If you have a damaged roof, cover it with a tarp to prevent further water infiltration and keep your home as safe as possible in the meantime. If damage is the result of a crime, call the police to file a report before contacting your insurance company. Write down the names of the police personnel you interact with.
Understand your policy.
Before you make the call to your insurance company, read through your copy of the policy so you understand the details of your coverage, including the deductible, coverage limits, and riders. If repairs are likely to cost less than or nearly equivalent to your deductible, filing a claim may cost you more than simply paying for repairs out of pocket. Keep in mind that claims against your policy can increase your rates.
Document the damage.
If you decide to file a claim, make sure to document all related damage. The more detail you provide, the better positioned you will be for full reimbursement for your losses. Make some notes to help you describe the damage as clearly as possible to your insurance representative during the initial call. Take pictures or videos of the damage, including as much detail as possible to send to your insurance company.
Call your insurer.
Next, call your insurance company to file a claim. Most insurance policies specify a time limit for notifying the insurer after an incident gives rise to a claim. These timeframes can vary, so be sure to follow the process laid out in your policy, and then ask if you are covered and what details they need from you.
Follow up with documentation.
Create an itemized list of anything that was damaged or lost. If you filed a police report, provide a copy of it to your insurance company. If your home is uninhabitable, keep every receipt from hotels, restaurants, and other related expenses. As you navigate the claims process, keep a record of every interaction with your insurance provider, including dates, times, names of the people you spoke to, and the information communicated.
How much will my homeowners policy pay me for losses?
Most policies offer different coverage levels. Check your policy to learn how the vaule of your losses will be determined.
- Actual cash value typically covers the cost to repair or replace the house plus the current value of other covered belongings. As a result, older items are likely to be covered at a fraction of their replacement cost.
- Replacement cost policies cover the actual cost to repair or replace your home and possessions, up to the policy’s coverage limits.
- Guaranteed replacement value is not always available. This type of policy covers the total cost of covered repairs and replacements, regardless of coverage limits.
Homeowners insurance policies can be complex and difficult to understand, but they can provide valuable protection when you need it most. By understanding how your policy works and filing timely claims when appropriate, you can protect your home, your family, and your financial future.