What Does Home Owners Insurance Cover?

Homeowners insurance is something all homeowners should have. Also called hazard insurance or home insurance, it is an affordable and often necessary way to protect your home against loss. If you will be borrowing money to purchase a home, most lenders will require that you obtain and maintain a certain level of insurance on the home as a condition for the loan.

The most basic form of homeowners insurance covers several included perils, such as fire or lightning, windstorm or hail, vandalism or malicious mischief, damage from vehicles or aircraft, explosion riot or civil commotion, glass breakage, smoke, volcanic eruption, and personal liability. The most comprehensive and common type of insurance on single-family homes used today is called an HO3 policy, or “All Risk Policy”. Instead of specifically naming the perils, this policy will cover any peril except those specifically excluded. Excluded perils most often involve damage caused by earth movement, power failure, war, nuclear hazard, freezing of a plumbing system, septic tank backup, or damage done intentionally.

It’s important that you review either what is included or excluded in your homeowners insurance with your insurance agent. If you’re in a flood zone, make sure flood insurance is included or not specifically excluded. If sinkholes are a problem in your area, they need to be included or not specifically excluded as well.