55 Most Common Questions About Homeowners Insurance
1. How Much Is a Homeowners Insurance Policy?
In the United States, the cost of home insurance is about $1,000 a month, give or take a few dollars. To prove the point, let's take a quick jog around the country and check out the average price for homeowners coverage in different states:
|State||Average Rate Per Year|
If you are renting, the average cost of renter's insurance in the U.S. is about $200 a year.
2. How Much Insurance Do I Need?
You need to buy as much home insurance as it would take to rebuild your home. Most homeowners insurance policies have a minimum of $100,000 in liability coverage, but most folks end up buying dwelling coverage in the amount of $300,000 and even up to $500,000.
3. What Does Homeowners Insurance Cover?
A standard homeowners insurance policy actually comprises four types of insurance products. Each of these products covers a different area of risk:
Dwelling coverage comprehends the structure of your house, including the walls, ceilings, floors and roof. While this protection extends to built-in appliances, an attached garage and an attached deck, dwelling coverage often does not cover your car or a stand-alone garage or shed.
Personal Property Insurance
This insurance covers your personal property, including your furniture, rugs, clothing, electronics, sporting equipment and, say, your piano. While this insurance covers stolen items, it does not cover lost items.
While most homeowners insurance policies place a strict coverage limit for jewelry, furs and other big-ticket items, you can purchase a separate insurance product that will reimburse you for the full replacement value of your favorite jewelry and any other luxury items.
Additional Living Expenses Insurance
Also called loss-of-use coverage, this insurance pays for your living expenses, including food and lodging, if your house suddenly becomes uninhabitable. While there is a policy limit on any loss-of-use coverage, some liability limits can be as high as 20% of the dollar amount of your dwelling liability protection.
Liability coverage pays for any lawsuits resulting from an injury sustained on your property by If someone is injured on your property, this insurance pays for your legal bills.
4. What Is a Premium?
A home insurance premium is the payment you make each month to keep your homeowners insurance policy active for a 12-month period. If you do not make consistent and on-time payments, your rate may be increased as a consequence. In fact, your insurer could drop you as a client.
5. Is Homeowners Insurance Paid in Advance?
Typically, one full year of homeowner's insurance is collected and prepaid to your insurance company at closing. After that, people usually pay in monthly installments, often with escrow payments.
6. What Is a Declaration Page?
When you buy a homeowners insurance policy, you are given a "declaration page," which is really just a detailed invoice. It lists your coverages, liability limits and deductibles, among other information. The declaration page is usually the first page of your policy jacket.
7. What Does a Home Insurance Quote Represent?
When you're looking to protect what's probably your most valuable financial asset, you are going to be weeding through a lot of quotes, or real-time estimates of what a 12-month homeowners insurance policy will end up costing you. Of course, the best way to find the cheapest homeowners coverage is to shop around, comparing policies and rates from several insurance companies, not just one. You can do it!
When you receive a quote from a home insurance agent, that quote represents the combined cost of the four types of home coverage listed above: dwelling, personal property, additional living expenses and liability.
8. What "Perils" Does Home Insurance Cover?
Will a homeowners insurance policy cover repairs when a hunk of blue ice—that is, an airplane's frozen sewage—crashes through your house's roof? Yes! But it is important to remember that homeowners policies only cover stipulated perils, which is another word for "risks." Most insurance coverage will reimburse you for the following perils:
- Fire damage
- Lightning strikes
- Wind damage
- Falling objects
- Theft and vandalism
- Damage caused by weight of snow, sleet or ice
- Damage caused by a vehicle
- Accidental discharge or overflow of water or steam
Essentially, homeowners policies cover accidents that are beyond a homeowner's control. But there are some spontaneous, unpreventable perils, such as earthquakes, landslides and floods, that standard policies don't compensate.
9. What Doesn't Home Insurance Cover?
Home insurance covers losses that are caused by certain perils, not losses caused from wear-and-tear or negligence. So, if you have a pipe leak that slowly builds up into an out-and-out gusher, any negative impacts from the deluge will most likely not be covered. In short, the homeowner is responsible for general upkeep and repairs.
Further, a standard homeowners policy will not cover earthquakes or floods. However, everyone should talk over the basics of their home coverage with their licensed insurance agent. They can tell you exactly what your homeowners insurance policy covers and explain your options.
10. Does Home Insurance Cover Mold?
If the mold is a result of a sudden accident, not the result of negligence, it is covered. So, if your office gets mold from the sprinkler systems after an employee's frozen lunch causes the microwave to burst into flames, your business will most likely be compensated for any mold-related losses.
11. Does Home Insurance Cover Roof Leaks?
You may be covered, but it depends on what's causing the leak. Do you have roof damage? If the roof is more than 20 years old, most insurance companies won't cover your home at all unless it passes inspection first. It's not unheard of for a homeowners insurance policy not to be renewed because the roof failed inspection. If your roof is 10 years old and suffers extensive damage after a hurricane, however, you will be covered. For more on when your roof is covered by home insurance, click here.
12. What If I Need My Roof Replaced?
It depends on whether the roof was neglected or damaged by a covered peril. If your insurance company does honor you claim, it will probably pay for the repair of the section that has been damaged, not the entire roof. In fact, an adjuster may decide that only the shingles need to be replaced! Further, you will still have to pay your insurance policy's full deductible before your insurance kicks in. So, do the math to see if filing a claim is worth it.
If you want to redo your whole roof as a general maintenance-and-upkeep project, you will be paying for that out of pocket or footing most of the bill. If you're looking for a specific answer, access your insurance company's website or call your agent.
13. What If I Have a Bad Roof?
Roof damage is sometimes covered by home insurance. However, if your roof is poorly maintained, you may not be covered at all. For more on roof-damage insurance claims, click here.
14. Does Home Insurance Cover Plumbing?
Regular plumbing issues are not covered by home insurance. However, if a plumbing issue ends up causing property damage, you may be covered. Home insurance does not cover damage that results from everyday wear-and-tear or negligence.
15. Does Home Insurance Cover Water Damage?
Perhaps! Home insurance will cover water damage in certain cases and not others. For instance, if a flood caused the water-related damage, you will only be covered by flood insurance, not your standard policy. Is the water damage due to a roof failure? You'll be covered if the roof was not neglected prior to the leak. To get more specific details on water-related damage coverage, click here.
16. Does Home Insurance Cover Sump Pumps?
If you have overflows or backups from your sump pump, sewer system, septic tank or drains, your standard homeowners insurance policy will not cover the damage. Indeed, the homeowner is responsible for general upkeep and repairs of everyday wear-and-tear. You can get coverage for these items by adding a separate "endorsement," or stand-alone add-on insurance.
17. What About Sewer-Line Replacement?
Some standard home insurance covers the cost of tearing out and replacing the damaged sewer line, but the pipe must be damaged. However, when the sewer line backs up in your home or when it is physically damaged from preventable means, insurance will not pay for its repair or replacement.
18. What About Broken Pipes Under the Slab?
In order to be covered, the damage must be sudden, not due to neglect. If you have any questions about your insurance policy's liability protection, ask your licensed insurance agent to explain the details.
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19. Does Home Insurance Cover the Foundation?
If your foundation needs repair because of faulty plumbing, you may be covered. However, repairing your plumbing system may not be covered. If your foundation was compromised by a flooding event, that should be covered by flood insurance.
20. Does Home Insurance Cover an AC Unit?
If your AC is rendered inoperable because of a covered event, the damage will be covered. But since the amount of your deductible must be paid first, it may make more financial sense to pay for your AC unit's repair or replacement yourself.
21. Does Home Insurance Cover HVAC?
Yes, a standard homeowners insurance policy covers heating, ventilation and air-conditioning (HVAC) systems. They are considered to be "built-in appliances," and most home policies cover built-in appliances. If getting HVAC coverage is important for your residence or business, be sure to share that information with your agent or broker.
22. Does Home Insurance Cover the Furnace?
Home insurance won't pay to replace your furnace. However, it will probably cover the cost of damages caused by your old furnace. Your policy should explicitly detail any coverage restrictions.
Keep in mind that your deductible may cost more than paying for you furnace to be repaired yourself. Further, insurers frown upon multiple claims made by a single insured, so you'll be jeopardizing your coverage if you file too many claims.
23. Are Sinkholes Covered by Home Insurance?
Just like earthquake, landslide or flood add-on insurance, sinkhole coverage is not included in a standard home insurance and must be purchased separately. There are two basic types of sinkhole insurance:
Sinkhole Loss Coverage
This insurance covers man-made sinkholes, including those caused by mining operations. This coverage may not cover naturally occurring sinkholes, so ask your insurance agent.
Catastrophic Ground Collapse Coverage
This coverage protects your home if it falls into a sinkhole and the foundation is damaged beyond repair. To qualify for catastrophic ground collapse coverage, a local government agency must officially condemn your house.
24. Does Home Insurance Cover Infestations?
Nope! Termite and bedbug infestations are usually not included in home coverage. However, if termites cause a fire by chewing through electrical wires you may be covered because fire is a covered peril. It's always a good idea to have a pest control company inspect your home every couple of years before any damage can become major damage.
25. Does Homeowners Insurance Cover Dog Bites?
Yes! If your dog bites an old family friend or a total stranger, the liability portion of your home insurance will pay for the claim. However, your coverage may not extend to your dog if it's considered to be an "aggressive breed."
26. Does Home Insurance Cover Fences?
Unless fences are specifically excluded in your policy, they are usually covered. To make sure you have the right information, ask your insurance agent about this coverage specific.
27. Does Home Insurance Cover Tree Removal?
Sometimes! Tree removal is usually covered if it does damage to the structure of the home or to a structure that is attached to the home. In other words, if you want to remove a diseased tree in the middle of your yard, you will have to pay for that out of your own wallet.
Not all home insurance policies cover the damage that tree roots can cause a sewer line. In fact, most sewer-line policies exclude tree-root damage, so it's unlikely those same policies will pay for the removal of the tree itself.
Even when tree removal is a covered claim, you will have to pay your deductible first. Since your deductible is anywhere between $250 and $1,000, it may make sense to pay for the tree removal yourself.
28. Are Trampoline-Caused Injuries Covered?
Trampolines are covered by some home insurance companies and not others. Some insurers will not allow you to renew if you install a trampoline in your backyard.
29. Are Vehicles Covered?
No. Home insurance covers homes, car insurance covers cars. However, your home insurance would cover any personal property that is stolen from your vehicle.
30. Does Home Insurance Cover a Broken TV Screen?
If your home was vandalized or severe weather has caused damage to your TV, you may be covered. However, insurance will not cover an accidentally damaged TV.
31. Does Home Insurance Cover a Handyman?
Maintenance needs are not covered by home insurance. If your handyman is doing repairs that have been approved in a claim, that work is covered. If your handyman causes any damage in the process of repairing your home, he should have his own insurance to cover that damage.
32. Does Home Insurance Cover Accidental Death?
Most insurance policies cover the death benefits of someone who has died as a result of an injury that was sustained on your property.
33. Does Home Insurance Cover Students?
Most homeowners insurance policies will cover full-time students under the age of 26, as long as they live in a campus dorm room. If your scholar is 26 years old or older, they should get their own renters insurance.
34. Does Home Insurance Cover Family Members?
Home insurance liability protection does not cover injuries that are sustained by household family members on your property. It only covers the injuries of visitors to your property.
35. Does Home Insurance Cover Storage Units?
Yes, the contents portion of your homeowners insurance covers your personal property, even if your belongings are in a storage unit. The same coverage, limits and covered perils apply.
36. Does Home Insurance Cover Illegal Access?
Yes, home insurance covers theft. Specifically, your personal property protection will reimburse you for stolen items. What's more, it's not uncommon for a company to compensate theft even if the item is stolen outside of your house—for example, when you're on vacation in some tropical place. Ideally, you should have a checklist of your valuables prior to a theft—a homeowners insurance inventory makes it easier to get your claim paid.
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37. Is Homeowners Insurance Required by Law?
There is no federal or state law that demands you get coverage for your domicile. However, if you get a mortgage, your mortgage lender will require it. In fact, your lender may include homeowners coverage in your mortgage! If that's the case, you're probably paying more than you should.
Your home insurance is not tied to your mortgage. It's just that the lender probably bought it for you to make sure their asset is protected. Find out what you're paying and shop home insurance rates. You'll probably save hundreds of dollars a year.
38. Is Homeowners Insurance Tax Deductible?
Home insurance is not tax deductible if your home is your residence and nothing else. However, you can probably get a tax deduction for your home insurance if you are a landlord and receive income from your domicile. Further, you can get a reduction in your taxes if you use a room in your house as a designated office for a small business, but that deduction will only be a percentage of your premium based on your home office's square footage.
If you run a business on your property, make this fact known to both your insurance agent and tax accountant. They will have the specific answers to your particular situation.
39. How To Calculate Homeowners Insurance
While rates vary according to many factors, you can do a back-of-the-envelope calculation using this handy guideline: Home insurance is about $35 a month, on average, for every $100,000 of your home's value. If your domicile is worth $200,000, you will owe about $70 a month.
40. Does Hazard Insurance=Home Insurance?
The "hazard" in "hazard insurance" is just another word for "peril," such as a fire-related disaster. So, your homeowners policy already covers these hazards. In short, hazard insurance is home insurance, so you don't have to purchase a separate insurance product. Most unforeseen hazards are compensated by a standard policy, except floods, earthquakes and landslides.
41. Does Mortgage Insurance=Home Insurance?
No. Mortgage insurance protects the lender, while home insurance protects you. However, you pay for both. If you have a mortgage, you are likely required to carry homeowners insurance. If your mortgage companies has bundled together your mortgage and your homeowners insurance, you're probably paying too much to protect your place.
Your home insurance is not tied to your mortgage. Find out what you're paying and shop home insurance rates. You'll probably save hundreds of dollars a year.
42. What's the Insurance for a Property I Rent?
If you are a landlord, you'll need a landlord insurance policy, which is a type of commercial insurance. A landlord policy covers property insurance, general liability and loss of rent.
43. How Does an Insurance Claim Work?
After you file a homeowners insurance claim, you will have to pay a deductible before you are sent a check for repairs. Usually, you will get at least two checks. If you have a mortgage, the checks may be sent to your mortgage company, so you'll have to work that out as repairs are being made.
44. How Are Homeowners Insurance Claims Paid?
An adjuster will inspect the damage and offer you a certain sum of money for repairs, based on the coverages in your homeowners insurance policy. The first check you get from your insurance company is often an advance against the total settlement amount, not the final or entire payment.
45. When Is the Deductible Due?
If your claim is accepted, you must pay the deductible before getting paid out. One way to lower your monthly premium is to opt for a higher deductible level.
46. Can I Get Insurance After a Non-Renewal?
Yes, but your premium rate may go up if there is a lapse in your homeowners protection. First, try comparing home insurance rates for free. After you answer some questions, an agent will tell you what your options are with various insurance companies.
47. How Long Does a Claim Stay on Your Record?
Between five and seven years.
48. What's Up with Umbrella Insurance?
An umbrella policy is a type of personal liability insurance that covers claims in excess of your regular homeowners coverage, comprehending your visitor's injury and any damage to their personal property. What's more, an umbrella policy covers households and family members, not just the policyholder. of their family or household. This extra insurance is not as expensive as you might think, so ask your insurance agent about it.
49. How Can I Sue a Property Owner?
You have to prove that the homeowner is responsible for your injury so that a claim can be filed with their insurance carrier. If the homeowner refuses to acknowledge responsibility, you'll need to file a police report and keep any documents related to any medical attention you received in relation to your injury.
50. Can My Home Policy Be Cancelled?
Yes, an insurance company can cancel or refuse to renew your homeowners policy. If you are not paying your premiums or have filed too many claims, your insurer may refuse to insure your home.
51. Can I Change Carriers at Any Time?
Yes, you can change your carrier at any time, but you should make sure you have your new homeowners or renters insurance in place before you discontinue your old policy. One way savvy shoppers save money is by comparing homeowners insurance rates once a year to see if they can get a better rate. It's ideal to switch insurers at renewal time, but you can switch any time.
52. Do You Get Home Insurance Before Closing?
Yes, you need to have homeowners insurance before or at closing.
53. What Is an "HO 3" Policy?
An HO 3 policy is the most commonly purchased type of home insurance. It meets the minimum requirements for lenders. This "open perils" policy extends to any direct damage to your house unless it is specifically excluded. If you want to cover other structures on your property—a detached garage or a shed, for example—you need to get a separate policy for that insurance.
54. What Is the "Replacement Cost Value"?
When you buy home insurance, you have the option of buying a policy that reimburses you for either the actual cash value or the replacement cost of your disaster-affected domicile. The replacement cost value (RCV) is how much it would cost to replace your damaged or destroyed home based on its market value. Further, some but not all policies cover the RCV of contents that were damaged or destroyed in the disaster. The actual cash value is based on the market value or the initial cost of the home, minus depreciation.
55. Can I Keep Extra Claim Money?
The answer to this question depends entirely on your carrier. In some cases, a company may require that you show proof for all the money you received from a claim. In other cases, a company will let you keep the balance. It's best to communicate clearly and honestly with your insurer so you don't spend what needs to be returned.
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