Unfortunately, too many homeowners have been shocked to learn that their home insurance policy won’t cover their loss due to an exclusion in their policy. This realization can come too late, especially if they have major damage that must now be fixed out of pocket. 

The time to understand what your homeowner’s insurance does and doesn’t cover is before you have a catastrophic incident. Conducting a periodic review of your homeowner’s policy with your insurance agent is a prudent way to protect your home and family from unexpected disaster and loss. 

Most homeowners’ policies include hazard insurance and liability insurance. 

Hazard insurance provides coverage for physical damage or loss involving your property and possessions. Mortgage lenders require this type of insurance coverage, and most people who own homes carry this hazard insurance.

Liability insurance provides coverage for injuries that occur on your property. It also applies to off-property damages caused by members of your household, including your pets. 

Hazard Insurance

This article will concentrate on having adequate hazard insurance coverage in place to protect your home. 

Hazard insurance typically covers any physical damage to your property and its contents. Covered situations include damage caused by fire and smoke, explosions, vandalism, most water damage, and a long list of weather events such as wind, hail, and lightning. In the South Florida region, a separate wind coverage rider is required for all mortgage holders. This wind policy covers damage that occurs in the case of a hurricane.

However, flood coverage is not included in standard homeowner’s policies or wind policy riders. This reality may come as an unwelcome surprise to a Port Charlotte resident who finds their home underwater after a hurricane. It is essential to determine the exact coverages regarding hurricanes, storms, and floods before an incident. In most cases, if a homeowner does not hold flood insurance, their damage falls under an exclusion. 

Other standard exclusions may include power outages or sewer backups, both of which may be expected following a significant storm.

In other words, if the hurricane damages your home, you are most likely covered. However, if the power goes out, and there is mold growth due to hot and humid conditions, you may not be. Another unexpected exclusion for many homeowners is damage caused by invading pests or vermin. 

Did You Know? Homeowner’s policies would not cover the cost of a new roof unless damage is caused by an external event such as a hurricane. An old roof that needs replacement due to normal wear and tear is not covered. Further, a roof at the end of its life torn off during a storm will typically only be covered to its depreciated value. 

Rebuilding Your Home

If a fire or other situation makes your residence unlivable, it is a reasonable expectation that your insurance company will pay to rebuild the structure.

However, the coverage you have and the money you receive depends on your policy terms. Most policies provide replacement cost coverage. This replacement cost is a set figure, established, and identified in your policy.

The dollar amount is calculated at the time of the policy issuance and takes into account the home size, location, number and type of rooms, building materials, and amenities. However, you may run into shortages if: 

  • building costs have gone up since your policy was written
  • a regional disaster increases the demand for contractors
  • remodels and upgrades were not updated in your insurance policy 
  • your house has historical features that will be difficult to replace to recreate.

Look out for “actual cash value coverage“. This coverage type is a perfect example of why understanding your policy is critical. If an insurance policy indicates payment of “actual cash value” of your house, a homeowner will only receive the house’s replacement cost minus any depreciation or wear and tear. 

The best way to understand your current homeowner’s coverage is to speak to your insurance agent in-depth regarding coverage and exclusions. At Ezzi Insurance Advisors, we pride ourselves on educating every customer and working with them to find the right balance between coverage, deductible, and budget.

Call today for a free consultation – and be ready for anything that may come your way.