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What Does Homeowners Insurance Really Cover?

June 22, 2020

Learn What Standard Home Insurance Really Includes

In this day and age, it is no longer a luxury to get homeowners insurance, it is a necessity. However, before signing on the dotted line, it is important to understand what you will be getting. This is because, not only will insurance companies offer slightly different plans, there will also be differences between different states. Some states require certain provisions and others don’t. Having said that, most homeowner’s insurance will offer similar coverage. You also do not need to be a homeowner to get insurance. Renters can also qualify for home insurance. In fact, some landlords require renters get their own insurance. The following are some of the are examples of what most homeowners insurance will cover.

  • Damages
  • Rental coverage
  • Liability coverage


If damage happens to both, the interior or exterior of the house from fire, wind, lightning, and vandalism. However, in most cases, damages caused by earthquakes, floods, and bad maintenance will not be covered. In some states, this kind of coverage will be available as an addendum. If your household belongings are destroyed by an insured disaster, insurance will cover it. This may include, furniture, appliances, and even clothing. Nevertheless, homeowners who possess a lot of valuable goods may want to think about getting a separate policy for it. If there are any other structures on the property, separate from the house, then you will need to get separate insurance for it as well.

Rental Coverage

In the event of a disaster that ends up destroying your home, you will obviously need to find another place to live. This is when a house or hotel rental coverage comes in handy. Insurance policies that cover rental coverage call it “additional living expenses” on their plan. It may never be needed but if it is, it will add tremendous peace of mind for you, especially if you have a family. However, keep in mind that there will be limits on how much you can spend. If you want to live in a 5-star hotel while the house is being fixed, then your premiums will naturally be higher.

Liability Coverage

It turns out, it is not only automobile insurance, but homeowner’s insurance also covers liability for damages caused by you or your family members, including pets. Examples would be if one of your family members breaks something expensive at the neighbor’s house. Another example would be if your dog decides to bite the mailman. In all these instances, the victim can sue for damages. With liability coverage, you will be saved from having to pay from your pocket. According to some studies, liability insurance should be at least $300K worth of coverage.

The Levels of Coverage

As mentioned, not all insurance policies are created equal. The coverage itself can vary according to several factors. Having said that, most homeowner’s insurance policies in the U.S are rated according to the levels of coverage. These levels run from HO-1 through HO-8. The levels of coverage will naturally depend on the need of the customer. The levels can be broadly grouped into three different types of values. They are:

  • Guaranteed
  • Actual
  • Replacement

Guaranteed Value

Guaranteed value is the top of the line in terms of coverage. It comes with an inflation-protected policy that will cover the entire cost of rebuilding, regardless of the cost is more than the actual policy limit. Guaranteed value policies will usually have the highest premiums. However, for homeowners who are planning on staying at their residence for long periods of time, should consider this type of plan.

Actual Value

The name says it all, actual value policies take into consideration inflation and depreciation of your possessions. This means the insurance company will only consider what the damaged items are worth at the time of a disaster, not what you actually paid for them or what the original value is.

Replacement Value

Replacement value is the opposite of actual value. It goes by what the item is originally worth, regardless of what you paid for it. With replacement value, you will be able to rebuild the house to its original specifications.

When to Buy Home Insurance

Most people purchase insurance when they purchase anything of high value and can be seen as an investment. Getting homeowners or renters insurance is required in most places. However, do not hesitate to shop around and find one that suits your needs and budget. Read the fine print and ask as many questions as you can, before signing on.  Use Get Insurance Pricing to connect with the top carriers and find the best home insurance plan for you!