Understanding Homeowner’s Insurance And What It Covers

homeowners insurance

Purchasing homeowner’s insurance is not only critical for protecting your home, your personal property and against any potential liability, but if you have a mortgage, your lender will require it.

What’s Covered By Homeowner’s Insurance

A homeowner’s insurance policy is a package of coverages, including:

  • Dwelling: Covers damages to your house and any attached structures, including fixtures such as plumbing, electrical and HVAC systems.
  • Other Structures: Pays for damage to unattached structures, including a detached garage, tool shed, fence, etc.
  • Personal Property: Covers personal possessions such as appliances, furniture, electronics, clothes, etc.
  • Loss of Use: Reimburses for additional living expenses while you are unable to live in your home.
  • Personal Liability: Pays claims if you are found liable for injuries or damages to another party.
  • Medical Payments: Pays the medical bills incurred by people who are hurt on your property or by your pets.

Remember, these coverages pertain only to losses caused by a peril covered by your policy. For instance, if your policy doesn’t cover earthquake damage, then losses will not be reimbursed.

Types of Homeowners Policies

The types of covered perils will depend on the type of policy you buy.

The Special Form is the most popular policy since it insures against all perils, except those specifically named in the policy. Common exclusions include earthquake and floods. Typically, flood insurance is obtained through the National Flood Insurance Program, while earthquake coverage may be obtained through an endorsement or a separate policy.

Limits of Coverage

Your policy will impose limits on the amount of covered losses.

If you have a valuable art collection or jewelry, you may want to secure additional insurance on those items.

Be aware of whether your policy insures for replacement cost (pays the cost to rebuild your home or repair damages using materials of similar kind and quality) or actual cash value (home value based on age and wear and tear), which may not cover all your losses.

Coordinating Umbrella Liability Coverage

Individuals with significant assets may want to consider attaching an umbrella policy to their homeowner’s policy, which provides liability coverage in excess of the liability limits of your current policy.

Midwest Insurance Group partners with Erie insurance, one of the nation’s leading auto and home insurers, with an A.M. Best rating of A+ (Superior).

How To Make Sure Your Homeowner’s Insurance Covers Replacement Cost

girl with drill

If you’re a homeowner or on your way to becoming one, you’ve probably heard about the increasing construction costs.

In addition to making the purchase of a new home difficult for many, skyrocketing prices for lumber and other materials are making replacement costs climb. Replacement cost is the amount it would take to rebuild your house in the event of a disaster and is one factor we consider when evaluating your coverage.

If you’re curious about how you can evaluate your own coverage in this challenging environment, here are some items to consider:

Last Review — When was your last insurance review? If it was a long time ago, your coverage amount could be too low.

Market Value — If you bought your own coverage and you used how much you paid for your home as the value, you could be WAY off.

Remodeling — Renovations and Additions cost more than ever. Make sure you insure your home for the extra work.

Talk to Your Agent — Ask your agent if your replacement cost is higher than it was previously and save yourself from big risks.

Having the right value on your coverage could be the difference between insurance saving the day or you paying out of pocket. Make sure your insurance works for you!

Call Midwest Insurance Group at 262-646-5777 to discuss different options for homeowner’s insurance.