The Top 25 Most Frequently Asked Questions about Homeowners Insurance
Owning a home is the American Dream for many people. Single moms are no exception. But owning a home is more than a mortgage. You have to protect your asset as well.
Do you know the worth of all your assets? Could you recover in case disasters like a fire or flood damaged your home? Could you recover from the theft of your property?
Homeowners insurance is one of the best types of coverage you can purchase if you own the home you live in. With this coverage, you can be sure of keeping a roof over your head and a shirt on your back. Homeowners insurance protects your property as well as your family and even your pets.
While many households have invested in homeowners insurance, not many truly understand its importance, or what it covers. Here are 25 commonly asked questions asked by consumers about homeowners insurance.
- Do I really need homeowners insurance?
If you don’t want to pay out of pocket for property damage and liabilities – such as medical fees for dog bites – you need homeowners insurance. The cost of recovering from theft or damage as well as defending yourself in a lawsuit can run into the thousands of dollars. Unless you have no attachment or need to replace the items you own (including your home), you should have some level of homeowners insurance.
- What does homeowners insurance cover?
This depends on the type of insurance policy you buy. According to a survey by the National Association of Insurance Commissioners (NAIC), 33 percent of Americans mistakenly believe that their homeowners insurance policy will cover them for flood damages.
A standard-form insurance policy doesn’t cover flood damage. Standard insurance policies usually cover damage by:
- Smoke
- Vehicles
- Falling objects
- Explosions
- Fire
- Lightning
- Weight of snow, sleet or ice
- Frozen plumbing and other household systems
- Theft and vandalism
You may have to get extra coverage for other disasters.
- Is homeowners insurance expensive?
According to a February 2016 study by the NAIC, the average cost of homeowners insurance increased by 6 percent to $1,096 in 2013. This is an average of $91 per month. This is much less than the thousands of dollars you would have to pay in case of a disaster or liability.
You can reduce the cost of homeowners insurance by comparing home insurance quotes online and searching for the best deal.
- Is my backyard shed included in my homeowners insurance policy?
Yes. Real property is included under the policy. Real property includes your home, any shed on your property, the garage and any other structure on the property.
- How much is my shed insured for?
The value of coverage for any auxiliary structure on your property such as a shed or garage, is dependent on the value of the main structure (i.e. your house). If the house is valued at $80,000 for example, then the shed will be covered for 10 percent of that value (i.e. $8,000).
- Who decided how much my property is worth?
This is determined based on state laws. Insurance companies will base the value on various common methods including actual cash value, replacement coverage and extended replacement cost.
- Are my valuables and jewelry included in the cover?
Standard policies have a limit to the coverage provided for jewelry. You may need to add extra coverage to ensure you are fully covered.
- Am I covered for flood damage?
No. If you live in a flood-prone area, you may need extra flood insurance.
- What about earthquake damage?
No. You will need additional insurance.
- Will my policy protect me if my neighbor slips and falls on my porch steps and threatens to sue me?
Yes. Your policy will cover the damages if you are found liable.
- Am I covered for damages if a tree on my property falls on my house in a storm?
Yes. You will be covered for damage of the roof and removal for the tree.
- Am I covered for the removal of a tree that falls during a storm but doesn’t damage my property?
No. Your trees are covered for risks such as fire and vandalism but not wind damage.
- Are my children who are away in college covered by my policy?
If your children are full-time students and still part of your household, they will be covered to a limit of 10 percent. Coverage for children living away from home varies from one insurance provider to another.
- Is my mother-in-law who lives with us covered under the policy?
She will be considered as part of the household and will have her property covered under the policy.
- Is my vacation home in another state covered under the same policy?
Insurance providers operating in multiple states can issue a policy to cover your vacation home. However, the second policy will only cover the property (i.e. a dwelling policy).
- I work from home. Is my business property covered?
Yes. However, the coverage is limited. It is therefore best to have additional coverage.
- Am I covered for natural disasters?
Natural disasters, also known as ‘Acts of God,’ are not covered by standard policy. Additional insurance is required.
- How much will I be paid in case of damage to my personal property?
This is outlined in your insurance policy under special limits. The amount paid will depend on your cover and the insurance provider.
- Are my possessions covered even when I’m on vacation?
Yes.
- I rent out a room to a tenant. Are they covered under my policy?
No. Tenants are not covered under homeowners insurance.
- Where should I start after losing my property?
Begin by taking inventory and then contacting your insurance provider.
- What do I do when my property is stolen?
Contact your insurance provider immediately.
- Is insurance for my condo different?
The coverage offered for condo owners insurance covers the same general areas as homeowners insurance. However, there may be some differences based on the specific requirements of the condominium unit owners.
- Are there exclusions in homeowners insurance policies?
Yes. These include intentional loss, neglect, damage caused by war or general power failure.
- My golf clubs were stolen from my car. Are they covered?
Yes. Homeowners insurance covers your property anywhere in the world.
Now that you have the answers to the most frequently asked questions are you ready to buy a home? If you already have a home do you have the protection you need? Be sure the home insurance agency you choose can answer all of your questions and give you the best value for your money.
Samantha A. Gregory is an author, consultant, and speaker. She’s a single-mom lifestyle, money, and parenting expert featured in The Washington Post, The New York Times, Essence Magazine, HuffPost, ABC News, and Mint.com.
Samantha founded the award-winning RichSingleMomma.com™, the first online magazine featuring personal finance, parenting, and personal development content and courses for single moms.
She aims to inspire women who are ready to thrive and not just survive in their single motherhood journey. Connect with her on Instagram @richsinglemomma.
