Coverage: Preventing Exposure
A typical homeowner insurance policy covers three areas:
Damage to your home’s structure: This includes garages, in-law apartments, or other attached dwellings. It may also include the shed in your backyard or the swimming pool your kids made you install last summer.
The contents of your home: This includes possessions inside your home, and possessions that are damaged or lost while outside your home. (That bike that was stolen from your car, the TV that was damaged in your daughter’s dorm room, etc.) If you have expensive jewelry or other high-value items, you may need to purchase additional coverage.
Liability protection for visitors to your home: For example, in the case of the neighbor injured at your barbeque, your insurance company will cover the costs of his medical assistance, providing your neighbor was injured due to your carelessness or negligence, and not through intentional misconduct. If your neighbor sues you, your policy will cover your legal defense.
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But, what’s not covered?
Your homeowner insurance policy will not cover absolutely everything. Exclusions vary by policy, with inexpensive policies like HO-1 offering the narrowest type of coverage. In any policy, exclusions may include freezing of pipes, theft from a building under construction, and insect infestation. Damage from floods, earthquakes, hurricanes and tornadoes is almost always excluded. If you live in a high-risk area, you should seriously consider purchasing separate insurance. The bottom line: Before purchasing any insurance, ask your company what losses your policy covers and what losses are not covered.
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