The call typically goes something like this: “Hey Wes. I have a question for you about my home insurance. Does my policy cover damage to …..?”
My answer is usually something along the lines of “Well, it depends…”
If you’ve ever wondered if a particular part of your home, personal belongings or property is covered under your insurance, you’re not alone. Your agent should be a great place to start. They should be willing to discuss the policy and how you are covered in a way that is easy to understand. However, the agent is never the final decision maker in what is covered versus what is not covered. They are different jobs requiring different licenses for legitimate reasons. But, agents are able to answer in general terms and should be knowledgeable about the policies they are selling you.
Let’s dive in.
There are two primary questions that have to be answered. #1 – what was damaged? #2 – what caused the damage?
For more details, keep reading.
First, let’s go back to question one. There are three sections that deal with what property is covered in your policy. First is the dwelling – the main home structure on the property. This would include a garage that is a separate structure but is connected by a covered breezeway. If the garage is only connected by a fence, utility line or something similar it’s not a part of the dwelling coverage. Instead it would be considered an “other structure.” Which brings us to the second section: other structures. These are any structure that is on that same property but set apart by a clear space. This is typically something like a completely detached garage, storage shed, fence, guest house, etc. They have a separate limit of coverage from the main structure. The third section is personal property. This is anything you would take with you if you moved out. Some categories have specific limits of coverage for certain types of damage or loss. For example, if you tried to claim you had $200,000 of cash in a particular bedroom that was stolen in a robbery or burned in a small fire, the insurance company is going to limit the amount you can claim for that cash to something like $200, not $200,000. Or maybe you have a ring with a center diamond worth around $10,000. If that ring or even the stone was lost, it would be limited to probably $1,500. However, you can insure that specific piece of jewelry for it’s total value by scheduling it at an additional cost.
Now for question two. Some policies (called Named Peril Policies) have a specific list of things that can happen (called perils) which are covered. The most basic policies cover damage caused by fire and lighting (very cheap policies). The next level of coverage may add about 6 other types of damage (peril) such as windstorm, hail and smoke. A level above that might add another 6 perils such as certain types of water damage. The best type of policies (called Open Peril Policies) will say something like “we insure against direct physical loss to your property unless we have specifically excluded it.” The difference here is that in the Named Peril types of policies, you have to prove damage was caused by something that is covered, versus the Open Peril type where the insurance company would have to prove it was damaged by something they have specifically excluded. The most common type of policy out there, the HO-3, is a combination. It covers structures with Open Peril and personal property Named Peril coverage.
On a side note, those policies that list specific perils that are covered are generally known as HO-A policies. They are going to be less expensive, but for a reason. It’s easy to deny those claims when many times, you may not know exactly how something was damaged. The best type is an HO-B. They are hard, but not impossible, to find and are generally going to be the most expensive. The most common, HO-3, is widely available and can vary in price significantly from one company to another.
Okay, now that we know what was damaged and how it was damaged, we can figure out the answer to your question. The next question is “how much will it cost to repair or replace?” We ask this because of deductibles. If you have a $3,000 deductible but the damage will only cost you $1,000, does it make sense to file a claim?
Well, that too depends on what’s happening around the claim. Is the house livable? That may bring in a whole other set of coverage called Loss of Use. And it could come into play big time. But that’s a topic for another article.
In the meantime, if you’re still here and found this useful and would like to talk to us more about your insurance coverage, you can reach out to us by email here. Or if you know you want a quote, but are short on time, you can click this link and be taken to our program that will take 2 minutes or less to complete. It asks a few questions then asks you to log into your current insurance account and will securely scrape the rest of the details from your current policy so we can get you an accurate quote.