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7 Frequently Asked House Insurance Questions
House insurance is must-have protection for every homeowner. Not only will your bank or mortgage lender require that you have a house insurance policy in place, but you will also want one and need one for safety and peace of mind. If something happens and your property is damaged, or you have a house fire, your property insurance policy will be your saving grace.
Despite the importance of house insurance; there is still a lot of confusion about it. Homeowners or prospective homeowners are often not 100 percent clear on what impacts the cost of their premiums, what their policy covers, and what it doesn’t—among other things. Below we have walked through some of the most common questions about homeowner’s insurance, to help you understand some of its important nuances.
What Does House Insurance Cover?
When you buy a homeowner’s insurance policy, you should be provided with a list of “covered events” by your insurance broker. Anything on this list is covered, which means you can make an insurance claim if any of those events happen to you. Anything not on the list is not covered, which means you can’t make a claim. Commonly covered events include:
- Fire damage
- Smoke damage
- Damage caused by weather (including hail, wind, lightning )
- Theft or burglary
- Damage caused by vehicles (such as a driver crashing their car into your house)
The coverage provided in these situations is straightforward. In other cases, though, house insurance coverage can get a bit more complex. The best example is with water damage. A common question in the insurance world is “does house insurance cover water damage.” The simplest answer to that question is “Sometimes.” Most cases, for water damage to be covered, it must be sudden and accidental—such as a burst pipe—your insurance policy will cover the damage. If flooding occurs because of a natural disaster, you would unfortunately not be covered unless you purchased the proper overland flood extension on your policy.
House insurance also includes liability coverage. If someone comes to your home, slips on your floor, and sues you for damages, your liability coverage would take effect to cover legal costs, medical expenses for the plaintiff, and settlement expenses if you were negligent.
What Does House Insurance Not Cover?
As mentioned above, your house insurance policy should list “covered events.” Any event or incident not included on that list is something you should assume is not covered by your policy. Here are a few common types of damage or home-related expenses that will not be covered by your house insurance policy:
- Damage from most natural disasters (including floods, hurricanes, earthquakes, landslides/mudslides, or sinkholes)
- Damage caused by warfare
- Damage caused by nuclear accidents
- Termite damage (including repair costs and removal costs)
- Tree removal costs
- Routine maintenance, repair or replacement costs (including roofing, plumbing, HVAC, appliances, and more)
Ultimately, the most important thing to understand is that damage needs to be caused by a covered event for it to be safeguarded under your insurance policy. For instance, if a massive hailstorm breaks several windows in your home, you can claim that damage because it was caused by a covered event. If your roof needed replacing due to normal wear and tear you would not have coverage.
Can House Insurance Deny a Claim?
Yes. House insurance companies can deny claims. If you make a claim involving termites, for example, your insurance company will deny the claim because your policy does not specify coverage for that type of damage. Even in cases where the loss results from a covered event, there is a possibility that your insurer could deny the claim.
A good example is if your roof collapses during a heavy snow and ice storm. Typically, this damage could be covered by your policy. However, if the insurer could prove that your roof had been in bad need of maintenance or replacement, they could deny your claim with the argument that the collapse occurred because of homeowner neglect.
Can I Get Additional Coverage?
While all house insurance policies have the same basic shape, you can purchase additional optional coverage if you need to fill in a gap in your policy’s covered events. These extra policies or riders expand your ability to make insurance claims. If you have specific personal property items that are very high-value—such as certain jewelry pieces or artwork—those items may not be covered under your standard policy. You would need to purchase additional coverage.
These additions, of course, will increase your insurance premiums.
How Much House Insurance Do I Need?
The answer to this question will vary depending on the homeowner and the value of their property. The good news is that you won’t typically be the one who needs to answer this question. Your mortgage lender will require that you have a certain amount of coverage for your home, and your insurance broker will know how to build a policy that makes sense for your property.
At a minimum, though, your policy should be able to cover the full replacement cost of your home, in the case of a total loss. Replacement cost is different than the sale price or market value, because it determines what it would cost to rebuild your home. You should also have enough contents insurance to cover the replacement costs of your personal belongings, including electronics, furniture, sporting equipment, clothing, and more. Again, the big variation in this category is if you have high-value items that require additional coverage.
What House Insurance Deductible Is Best?
Your broker will help you shape your insurance policy, but you will need to decide what you want the deductible to be. You can reduce your monthly premiums by opting for a higher deductible or decrease your deductible by choosing to pay higher premiums. There is no one-size-fits-all rule for what defines the “best” deductible. The rule of thumb is that you need a deductible that you can afford if something goes wrong. If a fire destroys an entire floor of your house, you can’t be in a position where you aren’t able to afford the deductible.
How Do I Find The Best House Insurance Company?
As you start comparing house insurance options, remember that you aren’t just comparing policies; you’re comparing carriers. Not all insurance companies are the same and finding one that you feel comfortable with should be a priority component of your search. Below, we have listed a few attributes that you should look for as you determine which insurance carrier is best for you.
- High ratings: J.D. Power is known for its ratings of companies in a range of different industries, including insurance. These ratings, which are based on a survey sample of customers, grade different aspects of a carrier, including customer service and range of offerings.
- Positive reviews: Though not nearly as formal or concise as J.D. Power ratings, customer reviews of insurance companies can tell you a lot. Does a carrier have a reputation for being slow with claims processing? You can use reviews to learn what the customer experience is like with an insurance company.
- Above-and-beyond customer service: As you are reading reviews or looking at J.D. Power ratings, pay attention to details about customer service. You want to be able to get in touch with a rep for your insurance carrier easily, whether you’re making a claim or have a question. Firms with reputations for strong customer service are top options. You can get a sense for how much of a priority customer service is by visiting a carrier’s website and seeing which tools they offer (live chat, customer portals, easy online claims systems, etc.) to make a customer’s life easier.
- Fairly-priced premiums: While low premiums aren’t everything—your deductible rate is a huge consideration—you certainly don’t want to overpay for coverage. Comparing coverage options across several different companies can tell you if a carrier is in line with the competition or charging significantly over or under the average.
Focusing on these four attributes will help you to find the best insurance company to provide the coverage that you are seeking. Whatever your lifestyle or whichever home you live in our insurance brokers are here to answer your questions and provide you with a policy that is built for you.