Home insurance

What does homeowners insurance usually cover?

A homeowners policy commonly combines protection for the home, certain other structures, personal belongings and personal liability. It may also help with additional living costs if a covered loss makes your home uninhabitable. Each part has limits, exclusions and conditions.

The important question is which causes of damage are covered. Standard policies generally do not cover flooding or earthquakes, and maintenance problems are different from sudden insured losses. Ask about the risks at your address and any separate protection you may need.

Rebuilding cost is different from the purchase price

The amount needed to rebuild your house is not necessarily its market value or your mortgage balance. Land value, local labor costs and the details of the building can make those figures very different.

Ask how the insurer estimates rebuilding cost. Tell the provider about renovations, an addition or upgraded finishes. Check whether extra coverage is available if rebuilding costs rise, and how building-code upgrades would be handled.

Understand how belongings would be valued

Replacement cost coverage generally pays to replace covered property with a similar new item, subject to the policy. Actual cash value normally takes depreciation into account. Ask which basis applies to your belongings and whether any payment is held back until you replace them.

Create a simple home inventory: room-by-room photos, a list of important items and receipts where you have them. Store a copy away from the home. Ask about separate limits for jewelry, collectibles, tools or business equipment rather than assuming the overall contents limit covers everything.

Check deductibles carefully

You may have one deductible for most claims and a different one for wind, hail or hurricanes. Some are dollar amounts; others are percentages of the insured dwelling amount.

For example, a 2% deductible on a $300,000 dwelling limit is $6,000. This is an illustration, not a quote. Ask the insurer to convert each percentage deductible into dollars so you know what you would need to fund after a loss.

Details to gather before comparing quotes

• The address, year built and approximate floor area.
• Roof age and material, plus recent electrical or plumbing updates.
• Renovations, detached buildings and security equipment.
• Your current limits, deductibles and claims history.
• Any rental use, home business, extended vacancy, pool or other feature the insurer asks about.

Keep those details consistent between quotes. If a property is being purchased, coordinate the start date with your lender and closing arrangements.

Questions worth asking before you buy

Ask how temporary accommodation is paid for, how long that benefit can last and whether dollar limits apply. Check the claims process and what emergency repairs you should arrange after damage. Review water backup, flood and wind protection separately if those are concerns at your home.

If you are considering bundling with auto insurance, compare the combined total and the coverage on both policies. A bundle discount is only one part of the decision.