What Does Homeowners Insurance Cover?

what does homeowners insurance cover

When you buy a home, you also need to purchase homeowners insurance, and possibly add-on endorsements. But, at its most basic, homeowners insurance covers four things:

  • Your home
  • Your personal belongings
  • Liability protection
  • Additional living expenses

Home Protection

In the aftermath of a fire or other disaster such as a hurricane, damaging hail or a lightening, a homeowners policy will pay to repair or rebuild your home. Note that a standard policy does not cover damage caused by an earthquake, flood or normal wear and tear.

Most standard homeowners insurance will also cover damage to detached structures like a tool shed, studio, garage or gazebo.

Protection for Personal Belongings

Homeowners insurance will pay to repair or replace your personal items in the event they are stolen or destroyed by an insured disaster. This includes furniture, electronics, clothing and other personal belongings. Your personal items will also be covered if you store them away from your home. If you own high-cost items such as jewelry, art, silverware and fur coats and want to insure them at full value, you’ll need to add on a personal property endorsement.

Standard homeowners insurance also covers trees, shrubs and plants that are damaged by an insurable event.

Liability Coverage

The liability coverage included in your homeowners policy protects you against lawsuits related to accidental bodily injury or property damage that you, your family members or pets inflict on other people. It will pay for your court defense and court awards you must pay. Liability coverage also provides no-fault medical coverage if someone other than you and your family is injured in your home.

Additional Living Expenses (ALE)

If you are unable to live in your home because it was damaged by an insured disaster, ALE covers the costs associated with things like hotel stays and meals. This is over and above regular living expenses you incur while your house is rebuilt. ALE also pays any rent you would normally receive from renting out a portion of your home. Some policies limit ALE coverage and might include time limitations. Since ALE is separate from the portion of your homeowners insurance that covers the cost of rebuilding your home, even if you use up your ALE limit your building costs are still fully covered.

Homeowners Insurance Coverage Limits

Your homeowners policy comes with limits as to the maximum it will pay towards a loss. It’s important to make sure your policy provides coverage based on the value of your home and personal items.

Find out how much coverage you need by talking with an insurance representative. But first, learn about 5 Things to Know Before Buying Home Insurance and compare quotes to get the best policy for you.


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