Overview of Homeowner's Insurance Coverage and Costs

overview of homeowners insuranceAs a homeowner, you will probably have an additional expense to tack on to your mortgage payment, utilities and general costs of home upkeep. Your lender will ask you to prove that you have bought homeowner’s insurance, which usually covers natural disasters and property crimes. However, basic coverage is limited in the protection it offers. You may want to consider additional insurance that protects you against further damage or liability.

What Homeowner’s Insurance Covers:

 

Property

Your homeowner’s insurance usually protects property and some structures on your land, such as a garage, pool or Jacuzzi. It also covers your furniture and limited amounts of jewelry.

 

Personal Liability

If someone has an accident or hurts themselves on your property, your homeowner’s insurance pays for medical costs.

 

Falling Objects

You are covered in the event of damage from a falling object, such as a bullet or debris from the sky.

 

What Homeowner’s Insurance Doesn’t Cover:

 

Property

Many policies do not cover business equipment or property used for non-residential purposes, such as a separate office. Art and jewelry is only insured up to a certain amount as specified in your policy.

 

Earthquake

Your home is not covered in the event of an earthquake unless you purchases separate coverage. This does not include water damage even if it’s related to the earthquake.

 

Flood

Similar to earthquake coverage, most insurance policies do not cover floods unless you purchase a separate policy. If you live in a location with frequent flooding, you will need to purchase flood insurance. The federal government sells flood insurance, or you can buy it from private companies.

 

Landslides or Shifting Land

You will also need to purchase additional coverage if you are in an area that experiences excessive land movement, such as landslides or shifting ground. Options include covering only your belongings or only the buildings on the land. Some coverage may overlap with flood insurance, such as flash floods or mud damage. Check the details of the policy to confirm specifics.

 

Mold

Most homeowner policies label mold a home maintenance concern and, as such, do not cover it. Your insurer can provide you with additional information about exceptions when you might be covered. You might also be able to add a rider to your policy. You can reduce the possibility of mold damage by keeping the humidity low in your home.

 

Volcanoes

Homeowner’s policies cover some volcanic damage, including clean-up of the inside and outside of your home from ashes and dust. Your policy should give you additional details about what is and is not covered.

 

Other Possible Damage

Homeowners are responsible for general home maintenance and upkeep of their residence. Most policies don’t cover damage caused by animals or damage due to the settling or cracking of the structure. You may not be covered if you have any type of second abode on your land, such as a guest home. The assets of a home-based business, such as a home day-care, might not be insured.

 

Costs

Homeowner’s insurance premium costs vary greatly from state to state and depend on several factors, including the types of natural disasters that you could expect in your area. Other factors include the crime rate, the size of your city, the age and type of your home and the security in the home. Many online resources compare rates for the same type of home in each state. For example, according to the website, http:// realestate.aol.com, as of October 2012, the most-expensive states, Florida, Texas and Louisiana have premiums that range from $1,400 to $1,534 for coverage. The least- expensive states, Idaho, Wisconsin and Oregon, charge between $422 to $496 for the same coverage.