The housing market is finally correcting after several quarters of exponential growth and rising prices. But while it may be tempting to get in on the action, overlooking certain insurance considerations often spells long-term trouble.
One area overlooked is home insurance coverage options like flood insurance. Even if you don’t live in a flood zone, flood insurance can still be important for homeowners. Let’s discuss some often-overlooked, yet still important, insurance coverages for homeowners.
What doesn’t standard homeowners insurance cover?
A standard homeowners insurance policy usually covers four types of perils: fire, lightning, windstorm, and hail (but not always.) In addition, most policies also cover theft, vandalism, and damage caused by water entering your home from the outside.
Of course, this means there are many things that are often not covered by homeowners insurance.
Flood Insurance Coverage
Even if you don’t live in a flood zone, flood insurance can still be important for homeowners. Flooding is the most common natural disaster in the United States, and anyone can be financially vulnerable to floods.
According to the National Flood Insurance Program (NFIP), just one inch of floodwater can cause significant damage to your home. And flood damage is not typically covered by standard homeowners insurance policies. So if you live in an area that’s prone to flooding, or even if you don’t, it’s worth considering flood insurance coverage for your home.
Wind and Hail Coverage
We mentioned previously that, while typical, some things are never 100% guaranteed to be covered. Wind and hail damage may or may not be covered by a standard homeowners insurance policy. So it is crucial to double-check when getting your policy set up.
If there were a severe thunderstorm that came through your town and damages your roof, and you don’t have wind and hail coverage, you would have to pay for the repairs out of your own pocket. But if you do have wind and hail coverage, your insurance company would reimburse you for the cost of the repairs.
Sewage and Water Coverage
If you have a septic tank or well on your property, it’s important to make sure you have sewage and water coverage. This type of coverage protects you from damage caused by sewage back-ups and water leaks.
If your septic tank were to overflow and damage your home. If you don’t have sewage and water coverage, you would have to pay for the repairs out of your own pocket. But if you do have sewage and water coverage, your insurance company would reimburse you for the cost of the repairs.
In addition, certain plans feature water backup coverage which covers issues with your sewer line like a sump pump failure.
Earthquake and Sinkhole Coverage
As we mentioned earlier, most standard homeowners insurance policies exclude coverage for damage caused by earthquakes and sinkholes. So if you live in an area that’s prone to either of these perils, it’s important to purchase additional coverage to protect your home.
If you have a $500,000 homeowners insurance policy and your home is damaged by an earthquake that caused $200,000 in damage. Your insurance company would only pay out $500,000, and you would be responsible for the remaining $200,000.
The same goes for sinkholes. If you live in an area that’s prone to sinkholes and your home is damaged by one, you would need to purchase additional coverage to protect your home.
How to Add Coverage to Your Homeowners Insurance Policy
If you’re a new homeowner or simply interested in adding any of the above coverages to your homeowners insurance policy, the best way to do it is to talk to your insurance agent. They can help you determine which coverages are right for you and add them to your policy.
You should also make sure to review your homeowners insurance policy regularly and update it as necessary. This will help ensure that you’re always properly protected in the event of a loss.
While it’s important to have adequate homeowners insurance coverage, it’s also important not to over-insure your home. You don’t want to end up paying more in premiums than you would ever receive in benefits.
So make sure to talk to your insurance agent about your coverage needs and make sure you’re getting the right coverage for your home.
Monitor your Policy Limits if you have Valuables
If you have valuables in your home, such as jewelry, art, or collectibles, it’s important to make sure that your homeowners insurance policy limit is high enough to cover their replacement value.
For example, let’s say you have a $500,000 homeowners insurance policy with a $100,000 personal property limit. If you have a fire in your home and your jewelry collection is valued at $150,000, you would only be reimbursed $100,000 for the loss.
To avoid this type of coverage gap, it’s important to review your policy limits regularly and increase them as necessary to keep up with the value of your belongings. You may also want to consider purchasing a separate jewelry insurance policy to cover your valuables.
Other Homeowners Insurance Tips
Here are a few other homeowners insurance tips to keep in mind:
- Bundle your home and auto insurance policies with the same company to get a discount.
- Increase your deductible to lower your premiums. Just make sure you have enough money saved up to cover the deductible if you need to file a claim.
- Install security features like a burglar alarm or deadbolt locks to get a discount on your premiums.
- Stop smoking to lower your rates.
- Ask about discounts. Some companies offer discounts for things like installing a new roof or being claim-free for a certain number of years.
By following these tips, you can save money on your homeowners insurance premiums and make sure you’re properly protected in the event of a loss.
Are you and your home properly covered?
Those are some of the often-overlooked, yet still important, insurance coverages for homeowners. Be sure to talk to your insurance agent about these coverages and others to make sure you’re properly protected.
And remember, you should review your homeowners insurance policy regularly and update it as necessary to make sure you’re always properly covered. Doing so could save you a lot of money and hassle in the long run.
Luke Williams writes and researches for the insurance comparison site, Clearsurance.com. His passions include insurance and helping homeowners stay protected from natural disasters.