What Does Homeowners Insurance Cover?

Homeowners insurance is designed to protect one's property, both the home as well as the contents from disasters. It also covers legal liability in the event of damage or injury to others while on one's property. Most disasters are covered, with the exception of floods and earthquakes, which have their own special insurance coverage, but must be purchased separately.

Standard Coverage

Most homeowners insurance policies include the following:

• Structural Damage - Most policies pay for the rebuilding of a home destroyed by fire, or other disasters; excluding floods, earthquakes, and normal wear and tear.
• Personal Belongings - Most insurers will cover between 50% to 70% of the value of one's personal belongings. If off-premises coverage is purchased for one's belongings, these are covered up to 10% of their value, including up to $500 of coverage for credit card fraud. Expensive items, such as furs and jewelry are generally covered, but have limits of $1,000 to $2,000 worth of coverage. Even trees and shrubberies are covered, for up to $500 per item, in some cases related to theft, vandalism, lightning, or falling airplanes, but not for wind or disease.
• Liability - Such coverage is for damage or injury that occurs to those visiting one's property, or another's property. For example, if a child spills juice on a neighbor's expensive rug, the parents' liability coverage will pay for the damage done to the rug. Coverage also extends to pets. Liability insurance is worldwide, and covers court costs and awards, as outlined by policy limits. Also covered are medical injuries incurred by others in one's home.
• Additional Living Expenses - Suppose one's home is damaged in a disaster, which means the family needs to live in a hotel while repairs are being made. Generally, most insurance companies will reimburse about 20% of the policy's coverage for such situations.

Types of Policies

There are a variety of homeowners policies, depending on one's living situation, and how much coverage one is willing to pay for. The general categories include:

• Dwelling and Personal Property - includes basic and broad coverage
  
• Dwelling Only - a special type of policy which includes coverage for disasters such as earthquakes and floods
  
• Personal Property Only - targeted towards renters, co-ops, and condominium owners
  
• Dwelling and Personal Property - modified coverage.

What's Covered?

The following calamities are typically covered by homeowners insurance:

• Fire or lightning
  
• Windstorm or hail
  
• Explosions
  
• Riots or civil unrest
  
• Aircraft damage
  
• Smoke
  
• Vandalism or theft
  
• Volcanic eruptions
  
• Falling objects
  
• Water damage from plumbing malfunctions
  
• Water heater incidents
  
• Frozen plumbing
  
• Electrical accidents.

Peace of Mind

Homeowners insurance policies are designed for different types of living situations—from renting to owning, from homes to condos, and to protect against lawsuits. Most homeowners policies are quite inexpensive, and can provide peace of mind, knowing that one's home and personal belongings are covered when unfortunate circumstance arise. Further, one can invite others into one's home, knowing that they will also be taken care of should an unfortunate accident take place.