Homeowners Insurance: What is it and What Does it Cover?

Homeowners insurance is something that all homeowners need, but not something that everyone necessarily knows the ins and outs of. Mercury Insurance found in a recent survey that 17% of homeowners admitted to not having even read their insurance policy to know what is or isn’t covered, and 50% of those surveyed are under the impression that their insurance policy will protect 100% of their property for any claim they might file. Knowing what is (and what isn’t) covered by your insurance policy is vital to protecting your home, which can be your most valuable asset.

“Your house is more than just a roof over your head,” said Christopher O’Rourke, vice president of property claims at Mercury Insurance. “It holds your favorite memories, treasured belongings and can be a solace to your family. Your home represents so much more than just the physical property, so protecting it with the right homeowners insurance coverage is of the utmost importance.”

What is Homeowners Insurance?

Homeowners insurance covers losses or damages to a dwelling and the belongings inside, as well as other structures on the property that are not attached to the home (e.g., a fence, car port or tool shed). It also provides liability coverage in the event visitors suffer injuries within the home or on the property, and it could extend to events off the premises as well.

It's important to note, though, that not all homeowners policies are the same and not every loss will be covered. Check your area to see what your local coverage includes.

If you do need to file a claim, you’ll likely pay a deductible ranging anywhere from $500 to $10,000 before your coverage kicks in. Although a higher deductible will typically mean lower premiums, it’s important to speak with your insurance agent to find out the best coverage options for your specific situation.

Homeowners insurance policies can include the following types of coverage options:

• Dwelling Protection: May help pay for the cost to repair or rebuild the physical structure of your home if it’s damage by a covered peril
• Other structures: Covers structures that are not attached to your home, such as a detached garage, fence, tool shed, gazebo, driveway or swimming pool
• Personal Property: This includes the contents of your home, like furniture, clothing, electronics and appliances (although possessions that are expensive, valuable and/or difficult to replace such as jewelry or fine art may require a more extensive coverage endorsement)
• Additional Living Expenses: Reimburse the cost of living expenses you incur – like hotel accommodations and meals – if your home becomes uninhabitable following a covered loss to help maintain a comparable standard of living while your home is being repaired.
• Personal Liability Protection: Provides financial support if you are sued for the damages up to the policy limit, such as medical bills or repairs
• Guest Medical Protection: Applies to the costs associated with injuries sustained by guests, regardless of who is at fault
• Extended Replacement Cost: Provides additional coverage of the dwelling’s policy limits to rebuild your home after a covered loss
• Identity Theft Protection: Pays for expenses you incur as a result of criminal identity theft
• Home Systems Protection: Covers a wide range of critical home systems and personal property in the event that they need to be repaired or replaced
• Home Cyber Protection: Protects families from losses such as compromised data on personal computers, mobile devices and other connected home technology, as well as damage to software and operating systems

What Does My Homeowners Insurance Cover?

It can be difficult to generalize what a typical homeowners insurance policy covers – coverage can vary from state to state and is based on the type of policy you choose. However, homeowners insurance policies will only cover perils that are specifically listed as covered events in the policy. This is why it is so important to read your policy in-depth and talk to your insurance agent to make sure you have the coverage you need so you know ahead of time what will or won’t be covered.

Commonly covered perils include:

• Fire and smoke damage
• Weather-related damage, such as wind or hail damage
• Water damage from internal sources, not from weather-related flooding
• Theft of personal property
• Vandalism
• Damage caused by snow or ice on the roof
• Damage from civil disturbances, such as riots
• Explosions
• Damage caused by motor vehicles or aircraft

What is Not Covered by My Homeowners Insurance?

Equally, if not more, important to know is what your homeowners insurance policy does not cover. Knowing this in advance can allow you to take the precautionary steps so you’re not caught unawares following a home disaster.

Events that are typically not covered by a standard homeowners insurance policy include:

• Floods
• Earthquakes
• Landslides and mudslides
• Damage caused by homeowners neglect

Thankfully, if you live in an area prone to flooding or earthquake, you can purchase a separate insurance policy to help protect your home – your insurance agent should be able to help you secure the proper type of coverage. Proper home maintenance can help to prevent damage from neglect, and can also help harden your home for disasters such as wildfires.

The most important thing you can do to protect your home is to be informed about your homeowners insurance policy. Mercury Insurance recommends that you reassess your homeowners insurance each year to ensure you have adequate coverage. Talk to a local insurance agent to make sure you have the right type and amount of coverage to protect your home and belongings for years to come.

Frequently Asked Questions about Homeowners Insurance

Does homeowners insurance cover floods?

A typical homeowners insurance policy does not cover flood damage, but your agent can help you too purchase a separate flood insurance policy to protect your home.

Does homeowners insurance cover earthquakes?

Homeowners insurance does not typically cover damage from any land movement, including earthquakes, landslides or mudslides. Your insurance agent can help you secure coverage through a separately purchased earthquake insurance policy.

Does homeowners insurance cover fences?

The detached structures on your property, such as fences, are not covered a typical homeowners insurance policy, but can be covered through purchasing an additional optional coverage for other structures (this would also include structures like your garage, a tool shed or a swimming pool).

Does homeowners insurance cover animal damage?

Your homeowners insurance policy may cover some types of animal damage. For example, if a deer runs into your porch, it would be covered under dwelling protection. If raccoons wreak havoc in your garage, structural damage should be covered under coverage for other structures. However, damage caused by insects or rodents – such as rats, mice or squirrels – is not covered under a typical homeowners insurance policy. Often, rodent damage can be prevented through routine maintenance such as closing your chimney flue.

If the damage is caused by a household pet, your homeowners insurance will not cover it.

Does homeowners insurance cover roof damage?

Your homeowners insurance policy covers roof damage caused by a covered peril. For example, if a windstorm knocks a tree into your roof, it is likely covered under your dwelling protection. Roof leaks caused by covered perils are also covered.

However, roof leaks or damage resulting from a lack of maintenance or from wear-and-tear are not covered by a standard homeowners policy. It’s important to conduct regular roof inspections and routine maintenance to your roof, and to learn about the roof’s history and condition upon purchasing a home.