What Is Covered by Homeowners Insurance?

Chances are, your home is your biggest investment, so it makes sense to safeguard it by buying homeowners insurance. Homeowners insurance typically covers your home and personal property against damage or theft and helps shield you from legal liability if visitors are injured on your property. However, you might need to buy some additional coverage to ensure your home is fully protected.

Standard Homeowners Insurance Coverage

Standard homeowners insurance generally includes four kinds of coverage:

• Dwelling Coverage: Pays the cost of repairing or rebuilding your home due to damage from covered incidents.
• Personal Property Coverage: Pays to repair belongings, such as furniture, clothing, or appliances, if they’re destroyed, stolen, or damaged by a covered event.
• Additional Living Expenses Coverage: Pays any additional costs of living elsewhere while your home is rebuilt or repaired after a covered event.
• Liability Insurance: Pays medical expenses if someone visiting your home is injured on your property and covers attorney costs and damages in case of a lawsuit.

What Is Not Covered by Homeowners Insurance?

Standard homeowners insurance doesn’t cover the following risks:

• Floods: Typically covers water damage from above but not from below.
• Earthquakes: Not covered as they don’t occur in many parts of the country.
• Sinkholes: Most states don’t include sinkhole insurance in standard policies.
• Sewer, Septic Tank, or Drain Backups: Proper maintenance can prevent these, so they aren’t covered.
• Normal Wear and Tear: Damage from typical wear and tear isn’t covered.
• Damage from Insects or Animals: Considered preventable and not covered.

Consider These Home Insurance Add-ons

To get more protection for your home, you may want to purchase add-on coverage:

• Flood Insurance: Available through the National Flood Insurance Program and private carriers.
• Earthquake Insurance: Available from private companies or the California Earthquake Authority.
• Sinkhole Insurance: May be available as an endorsement or separate policy.
• Water Backup Insurance: Covers damage from sewer, septic tank, drain, or sump pump failures.
• Replacement Cost Coverage: Reimburses the cost of purchasing equivalent new items.
• Excess Liability or Umbrella Coverage: Increases the limits of your liability insurance.
• Enhanced Dwelling Coverage: Includes inflation coverage, extended replacement coverage, and guaranteed replacement cost insurance.

How to Save Money on Home Insurance

There are several things you can do to save on homeowners insurance while still getting the coverage you need:

• Raise Your Deductible: A higher deductible typically means lower premiums.
• Reduce Risk: Add safety features such as a home security system or a fence around your pool.
• Look for Discounts: Lower rates may be available through your employer or membership organizations.
• Avoid Filing Frequent Claims: Filing a claim could prompt the insurance company to increase your premiums.
• Bundle Your Insurance: Buying multiple policies from one carrier often earns you a discount.
• Shop Around for Lower Rates: Get quotes from several companies and compare rates at least once a year.
• Improve Your Credit Score: Insurance companies may check your credit-based insurance score when you apply for homeowners insurance.

The Bottom Line

Buying insurance to protect your home is smart financial management. After all, your home likely accounts for a big chunk of your net worth. Budgeting for regular home maintenance can help reduce the risk of leaky roofs, burst pipes, or other problems your home insurance may not cover. While you’re at it, make a habit of keeping tabs on your credit. Experian’s free credit monitoring service alerts you to important changes to your credit report and score so you can take action if necessary.

For any mortgage service needs, contact O1ne Mortgage at 213-732-3074. Our team of experts is ready to assist you with all your mortgage needs. Don’t wait, call us today!