Homeowners insurance protects more than the structure of your home. A policy can also provide coverage for your belongings, certain structures on your property, additional living expenses and personal liability.
But homeowners insurance doesn’t cover every situation automatically. Understanding the basics can help you identify potential gaps and determine when additional coverage may make sense.
What Does Homeowners Insurance Cover?
While policies vary, homeowners insurance generally includes several key types of protection:
- Dwelling coverage helps repair or rebuild your home after a covered loss.
- Other structures’ coverage helps protect detached structures such as garages, sheds and fences.
- Personal property coverage helps cover belongings such as furniture, clothing and electronics.
- Personal liability coverage can help if you’re legally responsible for injuring someone or damaging their property.
- Medical payments coverage may help with certain medical expenses if someone who doesn’t live with you is injured on your property.
- Additional living expenses can help with increased living costs if a covered loss makes your home temporarily uninhabitable.
When reviewing your dwelling coverage, remember that your home’s market value isn’t necessarily the amount it would cost to rebuild. Construction and material costs can change, making it important to periodically review your dwelling limit.
Water Backup and Sump Pump Coverage
If you have a finished basement or rely on a sump pump, review how your policy handles water damage. Homeowners policies may exclude water that backs up through sewers or drains or overflows from a sump pump. Coverage for these losses may be available through an endorsement, with limits and options varying by insurance company.
Jewelry and Other Valuable Items
Homeowners insurance covers personal belongings, but certain categories of valuable property may have special limits. These can include jewelry, watches, collectible coins, silverware and other high-value items.
Depending on what you own, you may want to schedule individual items or add additional coverage. Keeping an inventory and obtaining updated appraisals for valuable property can also help you determine whether your existing coverage is sufficient.
Identity Theft Coverage
Recovering from identity theft can require significant time and expense to correct records, restore credit and resolve fraudulent accounts. Identity theft coverage may be available as an endorsement to help with certain recovery expenses. Ask your agent whether this protection is already included in your policy or can be added.
Home-Based Business Coverage
Working from home doesn’t necessarily mean your business activities are covered by your homeowners insurance.
Coverage may be limited for business equipment, inventory and liability associated with operating a business from your home. Depending on your activities, you may need a homeowners endorsement, home-based business policy or separate commercial coverage.
Protective Devices May Help You Save
Protecting your home could also help lower your insurance costs. Some insurance companies offer discounts or credits for qualifying protective devices, such as smoke alarms, deadbolt locks, fire extinguishers, monitored security systems or sprinkler systems. If you’ve upgraded your home’s security or safety features, ask your agent whether you qualify for a discount.
Don’t Overlook Personal Liability
Homeowners insurance can also provide important financial protection if you’re held responsible for someone else’s injuries or property damage.
Your liability needs may change if you have a dog, swimming pool, hot tub or other features that increase the potential for an accident. Depending on your risks and assets, you may also want to discuss higher liability limits or a personal umbrella policy with your agent.
Review Your Coverage Regularly
Your insurance needs can change along with your home and lifestyle. You may have remodeled your home, finished your basement, purchased valuable jewelry, installed a security system, brought home a dog or started a business.
A regular homeowners insurance review can help identify potential coverage gaps, update your protection and uncover available discounts.
Talk with your independent insurance agent about changes to your home, belongings and lifestyle. They can help you understand your current coverage and determine whether additional protection may be appropriate.
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