What is covered?
In most cases, whether you own or rent a home, the homeowners insurance company will reimburse you for costs, expenses, and other amounts related to:
· Loss of use
If your dwelling is not fit to live in because of damage covered by the policy, you should receive reimbursement for your family’s or household’s living expenses while you wait to permanently relocate or wait for the dwelling to be repaired. A set coverage limit is always applied to a policy’s standard loss-of-use coverage, but it can be increased by endorsement.
If you or another insured are found responsible for personal injury or property damage suffered by another person, your insurance company will offer a settlement amount owed to that person. This is only true if carelessness or negligence, rather than intentional misconduct, caused the injury or damage. If an injured or damaged person brings a lawsuit, your insurance company should pay to defend you or any other insured named in the lawsuit. For example, you may be found negligent if a meter reader was injured by falling off your tricky cellar stairs because the railing was broken (and you knew about the situation but failed to repair it). You may be found liable for intentional misconduct if you cut down a tree on your neighbor’s property to improve your view.
· Medical Payments to others
If a nonresident requires medical assistance as a result of an injury suffered on or near your premises, your insurance company should pay his or her medical expenses. Injuries that take place away from your premises are also covered, as long as you, another insured, a household employee, or your pet caused the injury.
Open perils vs named perils
Your policy can also cover either open perils or named perils. A named perils policy specifies which perils are covered as well as which perils are not. Rather than covering a number of listed or named perils, an open perils policy covers you broadly against risk or direct loss to your dwelling and other structures, and also includes an extensive list of perils which are not covered.
What is NOT Covered
There is a wide variety of damages, conditions, and costs that are not covered by homeowners insurance. Your insurance policy describes a number of situations that are specifically excepted or excluded from coverage (called exclusions). Some policies contain more exclusions than others. Your policy also describes certain conditions you must meet, and duties you must perform, in order for you to be covered. Terms and limitations that were originally included in your policy can be changed by a document called an “endorsement.” For these reasons, you should carefully read your homeowners policy to learn the limitations and exclusions that apply to your specific situation. Here are just a few examples of situations when you may not be covered by a standard homeowners insurance policy.
Although the structures and possessions that lie upon a parcel of land are usually covered by a homeowners policy, the land itself is not. This means, for example, you’re not covered by your policy if your neighbor’s pool overflows and contaminates your untilled garden.
· Coverage Limitations
The Declarations Page of your policy recites maximum coverage amounts that limit what the insurance company must pay. Separate limits are set for the dwelling, other structures, personal property, loss of use, personal liability, and medical payments to others. This means that even if you suffer a loss to your personal property in the amount of, let’s say $50,000, the insurance company will pay you no more than the policy’s stated limitation recited on the Declarations Page. If this figure within your policy is $100,000 then you’re covered for all of it. On the other hand, if it’s only $30,000 then you’ll have a $20,000 deficit.
Your homeowners policy will not cover you for damage that results from floods, waves sewer overflows, or water seeping into you basement.
If your involved in a business activity, your homeowners policy will not cover you for liability or medical payments due other persons, even if the damage or injury occurred in your home. Other structures located on your premises that are used for business purposes are also not covered by the policy. This means your standard homeowners policy will not reimburse you for medical care required by a client who slips and falls in your home office as he’s putting his coat on the rack.
· Your tenants
Your standard homeowners policy will not cover you for damages or injuries suffered by the tenants who rent any part of your home.
· Other insurance
If an injury or damage is covered by other insurance in addition to your homeowners policy, your homeowners insurance company will only pay its proportionate share of the amount due.
· Theft by another insured
Your homeowners insurance will not cover you for a loss caused by a theft committed by another insured person under the policy. This means your policy will not cover you if your nephew (who lives with you) steals a valuable baseball card from the family room.
· One or two family dwellings
Structures that have more than two family dwelling units cannot be covered by homeowners insurance.
Registered motor vehicles are specifically excluded from personal property coverage. Only vehicles like motorized wheelchairs and lawn mowers, which are not usually registered with the state, are covered by personal property insurance. Your car is also not covered under the “Personal Liability and Medical Payments to Others” sections of your homeowners policy because insurance companies prefer you to insure vehicles with an automobile insurance policy.