What Does Home Insurance Cover?

Virtually every homeowner has homeowner's insurance, but many people don't really understand what it does and doesn't cover. Here's a closer look at some common problems you may run into and what you can expect from your insurance company.

• Flooding
  Unfortunately, most homeowner's insurance policies do not cover damage caused by flooding. This means that unless you've purchased a separate flood policy, you'll be on the hook if your home is damaged from flooding caused by excessive rains or a strong storm. If you're in an area where flooding is common, you may want to ask your insurance agent about the cost of a separate flood policy.

• Mold
  Whether the insurance policy covers mold usually depends on what caused it. If it was caused by something that was covered, like a burst pipe, it will usually be covered. However, if the mold is an after-effect of flooding, then you're likely on your own.

• Earthquakes
  While most insurance providers offer separate earthquake policies, this is not usually covered under a regular homeowner's insurance policy. If you live in an area that's prone to earthquakes, this is definitely something you'll want to ask your insurance agent about.

• Water Leaks
  When it comes to water leaks, it often depends on how it occurs. Claims related to a slow leak, technically called "seepage and leakage," are often denied coverage.
  
  For example, if a pipe is slowly leaking behind the wall and causes damage over the long term, there's a good chance your insurer won't pay. However, the insurance often will pay for damage from a water leak that is "sudden and accidental."

• Wear and Tear
  Unfortunately, your homeowner's insurance policy won't pay for any damage caused by normal wear and tear. The purpose of homeowner's insurance is to cover emergencies that can't be avoided. So, if you see something that could become a problem, do yourself a favor and take care of it as soon as you can.

• Damage from Renovations
  Many people don't realize that you need a separate renovation policy when doing a major remodel — even if your contractor has a builder's risk policy. The builder's policy only covers new construction, not your existing structure.
  
  If you're doing small cosmetic changes, you might not need to worry. However, if you're doing something major — like removing the roof — your standard homeowner's policy likely won't cover you. A renovation policy will also cover you if anyone happens to wander onto your property during your renovation and get hurt.

• Sewer & Drain Backups
  In areas where heavy rains are common, a sewer or drain backup could flood your home. Unfortunately, not all insurance policies cover this, so you could end up paying the fix the damage.

• Fire, Lightning, Vandalism
  If the interior or exterior of your home is damaged due to fire, lightning, vandalism, or other covered disasters, you can expect your homeowner's insurance policy to cover it. The compensation should be sufficient to repair or even completely rebuild your home.

• Personal Property Damage
  If your personal property, like clothing, appliances, furniture, jewelry, and other items, is damaged in a covered disaster, your homeowner's insurance policy should cover it.
  
  Most policies provide coverage for 50% to 70% of the amount of insurance coverage you have on the structure of your home. So, for example, if you have $400,000 in insurance coverage, your policy should cover somewhere between $200,000 and $280,000 for your possessions.

While the information above is true for most homeowner's insurance policies, every policy is unique. The best way to understand your personal coverage is to review your policy details or talk to your insurance agent.

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