What Does Homeowners’ Insurance Cover in 2022?
As a part of buying a home, you’ll need to consider what will happen if something breaks or is damaged in the home. These issues can be costly and stressful to deal with, which is why it’s important to have insurance in place. Homeowners' insurance is often required, but even when it’s not, it is a good idea to plan to purchase a policy. Before you begin looking at homes for sale in Groveland, FL, you can read this guide to understand what a homeowners’ insurance policy covers and what to think about when it comes to your own coverage.
Basics of Homeowners’ Insurance
A standard homeowners’ insurance policy is designed to offer protection if you need to repair or replace your home and its contents as a result of damage. The most common situations that would activate a homeowners’ insurance policy are damage from fire, smoke, theft, vandalism, or a weather event like lightning or hail. Any external force, like a fallen tree, is often covered as well.
Which parts of your home are covered can vary by policy. Coverage generally includes things like heating and cooling systems, kitchen appliances, and personal belongings. Outbuildings like a garage, barn, or shed, and outdoor property like grills and swing sets are also usually a part of the coverage. Recreational equipment and swimming pools may be covered but may also require additional liability coverage.
In addition to the costs of repairs, you will usually be covered for living expenses when you need to find other accommodations while your home is rebuilt. You will also usually have liability coverage, which can offer reimbursement for medical and legal fees when someone is injured on your property.
Types of Insurance
Each policy will differ slightly, and it’s important to understand what your policy covers as well as how much you can expect in the event of a claim. Some mortgage lenders will require you only to have enough homeowners’ insurance coverage to pay off your mortgage, but that is usually not enough to rebuild a home and replace all your belongings. It’s also important to consider that costs will increase from the time you start your policy, so increased labor and material costs and changing zoning regulations may require more coverage.
For these reasons, it can be beneficial to consider a replacement cost homeowners’ insurance policy rather than an actual cash value policy. An actual cash value policy will factor in depreciation as a result of age and wear and tear, while a replacement cost policy provides coverage based on current costs.
For example, say a tree falls during a storm, damaging your roof. The roof was replaced 10 years prior to this event. A replacement cost policy will pay to replace the roof at today’s cost for labor and materials, while an actual cash value policy will deduct 10 years of depreciation. This same logic will apply to appliances, furniture, and anything else covered. A replacement cost policy is more expensive monthly, but in the long run, it is usually worth the added cost.
How Much Insurance Do I Need
The best way to estimate the amount of coverage you need is a simple formula: multiply the square footage of your home by the local building costs per square foot in your area. So if your home is 2,200 square feet and local building costs average $80 per square foot, the cost to rebuild your home would be about $176,000. An insurance agent will generally work with you to determine the cost in your area and determine this number. The same process can be applied to outbuildings on your property.
You should also take an inventory of all your possessions, including photos and videos, to reach an estimated value. For big-ticket items, make a note of where and when you purchased them. This will all create a record and help you determine how much monetary value you have in possessions and how much overage you need.
Most homeowners’ insurance policies cover belongings at a rate of about 50% to 70% of what your home is insured for. Meaning that if your home is insured for $400,000, reimbursement might be between $200,000 and $280,000 for all possessions. If you feel you may need more coverage, additional can usually be purchased.
What Common Circumstances Are Covered?
When it comes to home repair, a range of issues can occur. Some of them are always covered by insurance, while others are more rarely eligible under a policy.
Most of the time, mold is not covered by homeowners’ insurance. Some providers will offer coverage with limitations. For example, they may cover mold-related to a burst pipe, but not mold that results from a lack of maintenance.
When a roof leak is caused by a covered event, like a storm or hail, homeowners’ insurance should cover repairs, replacement, and necessary accommodations. However, if it is determined that the roof leak is a result of a lack of maintenance and no outside event, repairs are not likely to be covered.
Water damage caused by issues like a burst pipe or failed washing machine will typically be covered by a standard homeowners’ insurance policy, while damage from a lack of maintenance will not. Flood insurance is separate from this water damage coverage and must be purchased separately. Similarly, if your home floods because of a clogged drain or failed sump pump, this is usually not covered under basic insurance policies.
In most cases, termite damage is considered preventable and thus is caused by a homeowners’ lack of attention and proper maintenance. For this reason, it is usually not covered by homeowners’ insurance. If termites chew through wiring and cause a fire, this may fall under general coverage.
While most standard policies will cover losses from theft and vandalism, there is usually a cap on the amount the insurance provider will pay out. For this reason, valuable items like jewelry, artwork, or collectibles should usually be covered under an additional policy in order to ensure proper reimbursement.
Provided that the damage can’t be traced back to improper or insufficient care on the part of the homeowner, most plumbing issues will be covered under a standard policy, including a burst pipe or failed water heater.
Any homeowners’ insurance policy will include coverage for damage that results from fire and smoke. This can include teardown, clean up, and rebuilding costs for both the main structure and outbuildings, in addition to replacing possessions in the home and payment for alternate lodging during the rebuilding of the home.
The liability portion of homeowners’ insurance may cover injury to a non-resident while on your property, including if they are bitten by a dog. You can also consider additional liability insurance if you are concerned or have a dog with a history of biting, but know that some providers won’t cover particular breeds.
A tree falling onto any structure covered by your policy, including removal, up to the limits of the policy. If the tree did not cause any damage to the property, removal is usually not covered, especially if the tree is unhealthy or considered to not have been maintained properly.
Theft, fire, storm damage, or any other damage to an HVAC unit is covered under a standard homeowners’ insurance policy. Damage from negligence, wear and tear, or misuse will not usually be covered.
If your home’s foundation is damaged due to fire, weather, or another event, it usually will be covered by homeowners’ insurance. However, flood and earthquake damage require separate policies, and damage due to faulty construction or neglect is not covered.
Homeowners’ insurance will not replace your roof due to general wear and tear, neglect, or regulations that require replacement. However, if the roof is damaged due to fire, weather, or other events, it will be covered.
Fences and walls surrounding your home are considered a structure and should be covered like a garage or outbuilding would be, as long as the damage is caused by a covered event. Age, neglect, and wear and tear will not warrant a claim. Shrubs and plantings are similarly covered.
What to Expect for Homeowner Insurance Reimbursement
If you do have to file a claim, it’s important to know that it can take anywhere from a few weeks to a few years until you are paid a settlement. This can depend on the complexity of the issue and if there is any dispute as to the cause or the settlement.
While you may not be able to avoid some delays, you can ensure better results if you understand your coverage well and provide as much documentation as possible with your initial claim. Photos, videos, and copies of police or fire reports are always helpful, and each provider will usually require you to file within a certain window from when damage occurs. When these steps are followed, you will find that homeowners’ insurance is a critical protection of your assets.Posted by Florida Realty Marketplace on