What homeowner’s insurance covers

Have you recently experienced home damage? You have dealt with the emergency and begun assessing the extent of your loss. Now you’re undoubtedly wondering what your homeowner’s insurance covers and how much the settlement will be. Here’s an overview that will help you know what to expect when filing a claim.

What is covered?

Your home

Personal property coverage is a main component of home insurance. It encompasses many aspects of dwelling itself: the foundation, flooring, doors, windows and more. It can also include detached structures, such as garages and outbuildings.

Additional living expenses

If your home has been seriously damaged enough to be temporarily uninhabitable, you’re dealing with more than the cost of replacements and repairs. You are incurring a host of other expenses as you continue your life elsewhere. Fortunately, most homeowner’s insurance policies have an additional living expenses clause. They cover extra expenses related to being unable to live in your home. Here are a few examples:

• Temporary housing
• Meals
• Boarding a pet
• Additional travel

Policies have caps on the above spending categories. Your coverage is generally designed so that you can maintain your quality of life, so you probably can’t expect your insurer to foot the bill for a stay in a luxury resort.

Your belongings

Beyond the physical structure of your home, your policy also covers your belongings. Items such as fridges, computers, televisions and sports gear are usually included. You should note that equipment you regularly used for work or a business, such as a laptop or phone, may be excluded unless you purchased additional business coverage.

Damages to other people

Did the damaging incident affect a neighbour’s property or cause someone personal injury? That’s where personal liability insurance comes in. It’s the second main component of home insurance and compensates others for their losses. For example, a tree in your yard that falls and crushes your neighbours’ fence would fall into this category.

What types of damages are covered?

Coverage levels

Many types of damages—flooding, fire, wind, theft, and more—can be covered. Whether your insurer does so depends on the type of policy you have.

Standard coverage explicitly names the risks covered. If a risk isn’t named, you won’t receive a settlement.

With comprehensive coverage, it’s the other way around: all risks are covered except those that are specifically excluded.

Broad coverage is a hybrid. It covers all risks to your home’s physical structure aside from named exclusions. But your family’s belongings are covered only against named risks.

Homes that don’t meet the standards for other levels of insurance or rustic cottages and camps generally have no-frills, or basic, coverage. This bare-bones insurance only covers a limited list of items.

Read your policy or check with your claims adjuster about what type of coverage you have.

Unexpected and predictable events

How and when the damages occurred can also determine whether your property or belongings are covered. Insurers distinguish between unexpected and predictable events.

Usually, sudden, unexpected accidents are insured, and predictable events are not. For example, if a gust blows away a chunk of shingles, your insurance will pay for the damages because you couldn’t have anticipated the incident.

Predicable events are less likely to result in compensation. Losses due to failing to keep up on maintenance or take steps to stave off preventable risks, such as damage from rodents or insects, probably won’t be covered. If you fail to have a leaky roof fixed and it eventually collapses, you won’t receive a settlement for that predictable outcome.

Timing of damages

When the damaging event occurs usually has little impact. However, plans might not cover losses that happened while you were on vacation for more than a week (especially if you haven’t had someone check in on your house weekly).

How much will your settlement be?

Settlement amount

Settlement amounts depend on what type of policy you have. For personal belongings, you can be insured for their actual cash value. That is, an item’s current value after depreciation, or the replacement cost. If your policy covers the latter, your insurer should pay for the cost of a new item. For example, if a fire destroys your television, you will be refunded for a brand-new, equivalent model.

However, unless you previously added special coverage—called a floater or an endorsement—your insurance company might have a cap on high-value items. Costly possessions, such as expensive jewelry, valuable artwork and high-end bicycles, might not be covered for their full value. Your policy also probably sets limits on settlements for stolen or destroyed cash.

Deductibles

Your deductible will also affect how much you receive. A deductible is the amount you chose that will be deducted from the coverage level stated in your policy.

Tips for the settlement process

• Useful items: Hang on to any serial numbers, photos or receipts for damaged or lost items. They can expedite obtaining your settlement.
• Mortgage holders: Find out where you need to submit receipts. If you have a mortgage, the settlement could go directly to your lender. In that case, you submit them to it for reimbursement.
• Additional living expenses: You should continue paying your mortgage or rent. If you make arrangements to avoid doing so, your relocation costs won’t be considered additional living expenses. And be sure to save all your receipts related to being unable to live in your home so that you can submit them for reimbursement. Do you want to avoid the hassle of waiting to be paid back after making a large upfront payment for temporary housing? Keep in mind that some housing insurance providers, such as Sinistar, accept payments directly from insurers.

You now know the basic ins and outs of what to expect from homeowner’s insurance while having your home repaired and replacing lost belongings. The next step is to contact your claims adjuster. He or she will be able to help you understand the details of your policy.

Best of luck in filing your claim!