Standard Homeowner Insurance Policies Explained

Homeowners insurance typically covers damage caused to your home and property by lightning, theft, storms, fires, and burst water pipes. It also protects you from any liability you might have as a homeowner.

Standard home insurance can also offer you protection from explosions, hail storms, and damage caused by vehicles — even airplanes. Your homeowners policy may also cover damage to additional structures on your property, such as your garage or shed.

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Homeowners policies can vary widely between carriers so be sure to check the inclusions and exclusions of each policy you look at.

Typical Exclusions In Homeowners Policies

These things usually aren't covered by homeowners insurance:

• Acts of war
• Subsidence (natural land sinking that can damage your home)
• Flood damage
• Earthquake damage

The last two are especially important to have if your home is in an area with a higher risk of natural disaster.

The 3 Most Common Levels Of Homeowners Coverage

1. The extended replacement cost: Your home will be covered up to cap or specified dollar amount. For example, the dwelling coverage of your homeowners policy is $200,000 and has a cap of $300,000. If you had a house fire and your home needed to be rebuilt, then your extended replacement cost coverage would pay as much as $300,000 of your rebuilding costs.
2. The actual cash value: This means that your home and belongings will have coverage equal to the depreciated amount of their replacement value at the time of your loss.
3. The guaranteed replacement: There won’t be a maximum pay-out amount or a cap on the guaranteed replacement portion of your coverage. For instance: your home was originally worth $250,000, but you’ve made improvements that make it worth $350,000. If your home was destroyed by a fire your guaranteed replacement coverage would enable you to restore your home to its $350,000 condition.

This is a more costly type of homeowners coverage, but it also provides the most protection.

You may also want to consider what’s known as inflation protection. This type of coverage adjusts your homeowners policy annually to include increases in rebuilding costs, as determined by your insurance carrier's inflation statistics. With “inflation coverage,” you won't be underinsured if your home is damaged or destroyed.

Want to find out more about your homeowners insurance options? Talk with our network of insurance agents. Fill out an easy online form, and you'll be contacted with free insurance quotes.