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Homeowners Insurance: What Additional Coverage Do I Need?

February 06, 2024
Exterior of the Seawall floor plan in the Villas Collection at Kissing Tree in San Marcos TX

Did you know your standard insurance might not cover all the curveballs Mother Nature can throw at your home? Those heavy rains could mean flooding or the ground might rumble with an unexpected quake. That’s where additional insurance steps in – protecting your home from these specific, unpredictable disasters.

From floods to earthquakes, hurricanes to sinkholes, there’s a whole range of insurances tailored to keep your house safe. Let’s explore these lesser-known (but oh-so-important) types of home insurance.

What does a standard homeowners insurance policy typically cover?

A standard homeowners insurance policy typically covers several key areas:

  • Dwelling Coverage: This protects the physical structure of your home against covered perils like fire, vandalism, lightning strikes, and windstorms. It generally pays to repair or rebuild your house.
  • Other Structures: Coverage extends to structures on your property that aren’t attached to the main house, such as sheds, fences, or detached garages.
  • Personal Property: This covers your belongings – furniture, clothing, electronics, etc. – if they’re stolen, damaged, or destroyed by covered events, both at home and sometimes even when traveling.
  • Liability Protection: Liability protection covers lawsuits for bodily injury or property damage that policyholders, family members, or pets cause to other people. This coverage helps pay for medical expenses or legal fees that may arise.
  • Additional Living Expenses (ALE): Should your home become uninhabitable due to a covered event, ALE covers costs for temporary accommodation, meals, and other living expenses while your home is being repaired.

It’s important to note that policies can vary significantly depending on the insurer and the specific terms outlined in the policy. Always review your policy to understand what is and isn't covered, and contact your insurer if you have any questions.

What insurance coverage could I need beyond a standard homeowners insurance policy?

Depending on your home’s location and the specific risks associated with that area, certain events like floods, earthquakes, or hurricanes might not be included in a standard policy.

As a rule of thumb, damage and destruction due to earth movement (such as landslides, mudslides, earthquakes, and sinkholes) or floods (due to storms, typhoons, tsunamis, or hurricanes) are not usually covered by standard homeowners’ insurance.

Some additional types of coverage include:

  • Earthquake Insurance: Covers damages caused by earthquakes, which are typically not included in standard homeowners’ insurance policies.
  • Flood Insurance: Protects against damages from flooding and is especially crucial for flood-prone areas.
  • Windstorm or Hurricane Insurance: Covers damages from high winds or hurricanes.
  • Sewer Backup Insurance: Helps cover damages resulting from sewer backups, which might not be included in a standard policy.
  • Wildfire Insurance: Specifically covers damages from wildfires and is essential for homes in wildfire-prone areas.
  • Sinkhole Insurance: In areas susceptible to sinkholes, this insurance covers damages caused by the ground sinking.
  • Freezing or Winter Weather Insurance: Covers damage from frozen pipes, ice dams, and other winter-related issues.

How do I know if I need additional coverage beyond a standard homeowners insurance policy?

Determining if you need additional coverage often hinges on your property’s location, susceptibility to certain risks, and specific concerns.

  • Assess Your Location: Consider the geographic and environmental factors surrounding your home. Are you in a flood zone, earthquake-prone area, or a region known for hurricanes or wildfires? These factors can indicate the need for specific insurance.
  • Understand Regional Risks: Look into local climate patterns and research records of natural incidents.
  • Consult with Insurance Experts: Insurance professionals can provide valuable insights. They can assess your property, discuss risks specific to your location, and recommend additional coverage if necessary.
  • Consider Loan or Mortgage Requirements: Sometimes, mortgage lenders or loan providers require specific types of insurance (like flood insurance) if your property is in a high-risk area.
  • Review Your Standard Policy: It is essential to understand what your standard policy covers – and, more importantly, what it doesn’t. Any gaps in coverage that concern you may indicate a need for additional insurance.
  • Factor in Personal Concerns: Your circumstances will affect your insurance coverage. If you have valuable items or collections that exceed the coverage limits in your standard policy, additional coverage might be necessary to protect your assets adequately.

Homeowners insurance isn’t a luxury; it’s a necessity. Virtually all mortgage companies require borrowers to have insurance coverage for a property's full or fair value and won’t make a loan or finance a real estate transaction without proof of it.

Talking to a knowledgeable insurance agent or company can help you navigate policy details, coverage gaps, and additional coverage suggestions based on your location and circumstances.

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