Frequently asked questions (FAQs) about homeowners insurance

Homeowners insurance is a type of insurance that financially protects your home’s structure and your belongings from covered losses. Like most types of insurance policies, you pay a premium in exchange for protection from major perils that could financially devastate you. Annual insurance premiums will vary depending on many factors, but the premium is typically small compared to the insured value of your home an insurance company may pay out in the event your home is completely destroyed.
Each homeowners insurance policy is unique and covers your home and property in different ways with different exceptions. In general, homeowners insurance may cover your home’s structure and other structures on your property, your personal belongings, your personal liability from accidents and injuries at your home, etc. Covered events may include perils like fire, vandalism, theft, lightning, hail, windstorms, explosions, and water damage. However, most policies don’t cover other events like floods, sinkholes, and earthquakes. In the event you want to be protected from a peril not covered by your homeowners insurance policy, you may be able to add a rider to add coverage or you may have to buy a separate policy to cover the other perils.
There’s one big thing home insurance doesn’t cover: Flood damage. If you live in a federally-designated flood area, your mortgage may require you to have flood insurance, which is pricey. It can be purchased through the National Flood Insurance Program or most local insurance agents. Your homeowner’s policy may also exclude or limit coverage from damage by earthquake, hurricane, hail, or tornadoes. In many cases, you’ll need to add additional coverage to your policy for these items. Other things that home insurance won’t cover include normal wear and tear on your home (including things like furnaces or air conditioners failing because of old age). Finally, although home insurance covers belongings like electronics and jewelry, there are limits. If you have a lot of expensive jewelry, you may want to look into additional coverage above and beyond your home insurance.

About the author

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Lauren Graves is a personal finance writer specializing in honest brand and product reviews. She wants to help people feel less stressed when they spend their hard-earned cash and do her part to make money make sense.