Does Home Insurance Cover 100%? What Homeowners Insurance Does Not Cover

As an insurance agent, I often get asked whether home insurance covers 100% of damages and what exactly it doesn't cover. It's a great question and one that every homeowner should understand to ensure they have the right protection in place.

Does Home Insurance Cover 100%?

The short answer is no, home insurance does not cover 100% of all possible damages. Homeowners insurance is designed to protect you from a wide range of risks, but it has its limits and exclusions. Here’s a breakdown of what you can typically expect:

1. Dwelling Coverage: This covers the structure of your home, including walls, roof, and built-in appliances. However, it usually covers the cost to rebuild or repair your home up to the policy limit, which may not be 100% of the home's value, especially if construction costs have increased.

• There is a guideline with insurance, that a home must be insured at 80% of it’s replacement value. If the coverage is less than 80% of the replacement cost value, the insurance company will pay only a proportionate amount of the claim. For example, if your home’s replacement cost is $200,000, you should have at least $160,000 in coverage to meet the 80% rule. If you have less than that, say $150,000, the insurer will only cover a portion of the damage costs

1. Personal Property Coverage: This covers your personal belongings, such as furniture, electronics, and clothing. Most policies cover these items up to a certain percentage of the dwelling coverage limit, often around 50-70%. High-value items like jewelry or art may have sub-limits, meaning they are only covered up to a specific amount unless you purchase additional coverage.
2. Liability Coverage: This protects you if someone is injured on your property and you are found legally responsible. It covers legal fees and medical expenses, but again, only up to the policy limit. We recommend that our clients have a minimum of $300,000 in liability coverage and $5,000 in medical payments coverage.
3. Additional Living Expenses: If your home is uninhabitable due to a covered loss, ALE covers the cost of living elsewhere temporarily. This includes hotel bills, restaurant meals, and other living expenses, but only up to a certain limit.

For more information about Home Insurance coverage, visit our website or talk to one of our agents at 850-244-1574.

What Homeowners Insurance Does Not Cover

While homeowners insurance covers many risks, there are several common exclusions:

1. Flood Damage: Standard homeowners insurance does not cover flood damage. If you live in a flood-prone area, you’ll need to purchase separate flood insurance through the National Flood Insurance Program (NFIP) or a private insurer. We provide
2. Earthquake Damage: Earthquakes are another natural disaster not covered by standard policies. You can buy separate earthquake insurance if you live in an area prone to seismic activity.
3. Maintenance Issues: Damage resulting from neglect or lack of maintenance, such as mold, pest infestations, or gradual wear and tear, is typically not covered. Homeowners are expected to maintain their property to prevent such issues.
4. High-Value Items: As mentioned earlier, items like jewelry, art, and collectibles may not be fully covered under standard personal property limits. You may need to purchase additional endorsements or umbrella coverage to protect these items adequately. 
5. Acts of War or Terrorism: Most policies exclude damage caused by acts of war or terrorism. Some insurers offer separate coverage for these risks, but it’s not standard.
6. Business Operations: If you run a business through your home that includes inventory and/or specialty equipment, you can't rely on your home insurance to cover this. You'll need separate business coverage. See our recent blog about what scenarios you'll need this coverage.

Conclusion

Understanding the limits and exclusions of your homeowners insurance policy is crucial. While it provides broad protection, it doesn’t cover everything. Reviewing your policy with an insurance agent can help you identify any gaps in coverage and ensure you have the right protection for your needs. Remember, the goal is to have peace of mind knowing that your home and belongings are adequately protected against the unexpected. Our agency, Norton Insurance of Florida, is located in Florida and has some of the greatest threats in the nation. But by having the most knowledgeable staff, we are equiped to answer and help with your potential risk. To talk with an agent or start a quote, visit our website today.