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What Does Home Insurance Cover (and What Does It Not)?

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What does home insurance cover (and not)?
Sarah Badani
Sarah Badani
May. 28, 20213 min read
If you own a home or have just bought one recently, and want to get your property and belongings insured, it’s important for you to have a good grasp of what is covered and what isn’t.

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On a basic level, homeowners insurance covers damages that occur under certain given conditions to specific areas or items within or around the house. Since that definition is pretty vague, most people will walk away from it understandably confused and wanting clarification.

In fact, there are different types of home insurance. Each one covers different parts of the home, types of damages, and belongings. Since homeowners insurance is a package policy, there are multiple items and conditions covered under a single policy, but you have to know what’s covered and what’s not. Here’s a crash course in homeowners insurance. It walks you through all you need to know about coverage, policy types, benefits you receive, and the fine print you need to look out for.

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Types of Home Insurance & What They Cover

Believe it or not, there are no less than 8 different types of homeowners insurance, categorized as HO1-HO8, and each one falls into its own category of coverage and parameters. These are:

HO1

HO1 is the most basic form of homeowners insurance. It covers any structural damage incurred to your home from things like fire, explosions, hail storms, lightning, theft, vandalism, vehicular or aircraft damage, riots, and volcanic eruptions. These barebones policies aren’t inclusive enough for most people since they don’t cover things like liability or floods, so homeowners generally skip this option for a more inclusive plan.

HO2

This one covers everything from HO1 plus more damages like falling objects, snow, sleet, or ice, household systems being frozen over, pipes, and accidental damage caused by a sudden surge of electricity. This policy will frequently include belongings and liability, making it a more popular option.

HO3

Probably the most frequently used form of homeowners insurance, HO3 policies are even more inclusive than the previous 2. It includes everything from those 2 categories, but unlike HO2 policies, an HO3 policy is not exclusive to the damages listed. In other words, if something happens outside the specified parameters of the policy, you will still be covered. In fact, HO3 policies list exclusion instances, and everything else is automatically covered.

HO4

HO4 policies, aka renters insurance, cover renters, insuring belongings and liability without covering the actual property or building structure.

HO5

HO5 is another open-peril policy, so you will be covered in all events that aren’t excluded specifically in your policy. Some damages that are covered include earthquakes, floods, water damage, infestations, pets, mold, fungus, war, rust, corrosion, and more. The difference between an HO5 and an HO3 policy is that belongings are covered more widely with an HO5 policy, and you can set the coverage amount for liability. For this reason, HO5 policies are usually more expensive too.

HO6

HO6 policies protect the belongings and liability of condo owners specifically. It can also cover the walls, ceiling, and floors.

HO7

This is the same idea as HO6, only for mobile homes.

HO8

This policy is meant to cover issues that come up with older homes, but it is basically the same idea as HO3 for older homes.

So What’s Covered? Policies Explained in English

Of course, even after that lengthy explanation, you still probably don’t know what is covered by your insurance policy or the policy you are considering purchasing. That’s because insurance providers seldom refer to their policies with the official HO names. Here’s a more approachable list of plans and what’s covered.

While different states, companies, and plans can vary slightly, the most traditional type of homeowners insurance will include 4 types of coverage:

  1. Structural damage to your home

This will cover any expenses to repair or rebuild your home or part of your home in the event that one of the covered incidents occurs. Incidents are listed on your policy, but they generally include fire, lightning, hail, hurricane, and other natural disasters. Floods and earthquakes are not covered under these policies traditionally. It’s also worth checking your policy to see if external fixtures not attached to your home are covered (like a gazebo or a tool shed) because often they are.

  1. Damage to your personal belongings

This part of the policy will pay for fixing or replacing personal belongings that were damaged or destroyed because of one of the covered incidents. This can include clothing, furniture, and other typical items. The policy won’t cover expensive items, as there is a separate type of policy for these belongings. Interestingly enough, most policies will cover your belongings no matter where they are. So, if your sweater is stolen while traveling in Prague, you can get that covered.

  1. Bodily injury, aka liability

Liability pays for 2 things: bodily injury that was incurred by you or another party on your property, or bodily injury or property damage that are caused by a policy holder or family member.

  1. Additional living expenses

Finally, most insurance policies will cover the costs of additional living expenses during the time that your home remains uninhabitable due to one of the incidents covered by the policy.

The basic home insurance policy will cover 16 damage-causing acts, or perils as they are termed in the industry. 

These include:

  • Fire or lightning

  • Windstorm or hail

  • Explosions

  • Riots or civil commotion

  • Damage caused by aircrafts

  • Damage caused by vehicles

  • Vandalism or malicious mischief

  • Smoke

  • Volcanic eruption

  • Theft

  • Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system

  • Falling object

  • Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance

  • Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component)

  • Weight of ice, snow, or sleet

  • Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliances.

What’s Not Covered: Read Carefully!

Now, for the really important part, what’s not covered. In general, policy providers will give you a list of incidents that are not covered under your home insurance policy. But it is always worth asking again just to be sure. Understand which type of policy you are getting to understand the exclusions that come along with it, and if you don’t understand, don’t be afraid to ask.

This is not in any way a comprehensive list, but most often the following items will not be covered by your home insurance policy:

  • Floods

  • Sewer backups

  • Earthquakes

  • Land movement

  • Natural wear and tear over time

  • Intentional damage or destruction of property

  • Pollution

  • Rodents, insects, animal, or wildlife damage

A Little Word on Riders

That’s the basic gist of your homeowners insurance policy, but it’s not the full extent of things. You can also get additional benefits or extensions on your policy. These are called riders, and they’re basically add-ons to supplement your current policy. Since most insurance policies come with limits on how much they’ll pay out in the event of an incident, many homeowners wish to increase or extend their rights included in their coverage by purchasing additional riders.

Riders can cover items that aren't covered in the original policy, or they can extend the amount paid out beyond the original limit. Often, people will purchase riders for expensive pieces of art or jewelry, antiques, collectibles, or expensive equipment.

Getting the Best Home Insurance for You

Now that you understand all there is to know about homeowners insurance, you can make a more educated decision about which policy and provider are right for you. Determine how much you should expect to pay and learn a few tricks on how to keep your insurance costs down before settling on the best plan for you.

The Top Home Insurance Providers

HomeInsurance.net

HomeInsurance.net is an insurance policy rates marketplace. What that means is that it connects homeowners directly with home insurance companies or agents to help them compare rates on new insurance policies. While not a direct insurance provider, HomeInsurance.Net can help you compare different price quotes, which may lead to finding the most competitive rates for your new home insurance policy. The service is free, so there’s not much to lose. Read the full review.

HomeInsurance.net HomeInsurance.net View Rates

QuoteWizard

QuoteWizard has an A+ rating from the Better Business Bureau, a good consumer reputation, and fast online application. This online home insurance marketplace helps homeowners find the most desireable deals they can from home insurance agencies in their area. From bodily injury to property damage liability, it may be covered with a QuoteWizard partner policy. Read the full review.

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SaveQuote

SaveQuote is an online insurance aggregator, delivering multiple quotes for local home insurance providers. With an easy-access online platform, SaveQuote helps home insurance consumers find the right policies for their needs and budget, without hassle. Read the full review.

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Top 5 Home Insurance

Lemonade

Lemonade

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Sarah Badani
Written bySarah Badani

Sarah Badani has extensive research and review experience in the finance industry. With a degree in psychology and education, she brings a level of depth and understanding to her writing along with her own flavor to spice up each topic in a unique and inviting way. She writes for BestMoney and enjoys helping readers make sense of the options on the market.‎

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