Do You Know What Homeowner’s Insurance Covers…and What It Doesn’t?

Do You Know What Homeowner’s Insurance Covers…and What It Doesn’t?

Many of us will remember 2017 as the year of natural disasters. Even if you weren’t in the path of a coming storm or a spreading wildfire, you probably knew someone who was. It was a year of hurricanes, wildfires, flooding and severe weather. Economic losses resulting from weather disasters totaled $344 billion, making 2017 the costliest year ever.

In 2017, there were thirty-one billion-dollar events worldwide. Sixteen were in the United States, including four of the top 10 global economic loss events.

1. Hurricane Harvey ($100 billion)
3. Hurricane Irma ($55 billion)
4. Wildfires ($13 billion)
10. Severe Weather ($3.4 billion)

Insurance played a big role in helping victims recover from staggering property losses. Of the $181 billion in losses suffered in 2017, $84 billion was covered by public and private insurers. Though a substantial number of losses involved homes and personal property, not all of them were covered by homeowners’ insurance. Unfortunately, many victims did not know what their policies did and did not cover until it was too late.

There are two general types (forms) of homeowners’ policies. Broad Form policies protect against perils that are specifically named in the policy. Special Form policies generally provide coverage against all risks, except those that are specifically excluded in the policy. Both standard policy forms generally protect dwellings and personal property against:

  • Fire, smoke and lightning;
  • Windstorm and hail;
  • Explosions and volcanic eruptions;
  • Damage caused by vehicles, aircraft and falling objects;
  • Theft, vandalism, malicious mischief, riot and civil commotion;
  • Weight of ice, snow or sleet;
  • Discharge, overflow or freezing of pipes, heating and A/C systems, fire sprinklers and household appliances;
  • Tears, cracks and burns of water heating, A/C and fire sprinkler systems; and
  • Damage from electrical currents in appliances or wiring.

Standard Special Form policies also protect against all other perils except those that are specifically excluded in the policy. Common exclusions include:

  • Flood;
  • Earthquake;
  • War;
  • Nuclear accident; and
  • Landslide, mudslide and sinkhole.

The increasing frequency and intensity of natural disasters have put homeowners at greater risk. Though we can hope for a better 2018, we would be wise to learn the lessons of 2017. Now is the time to review your homeowners’ insurance coverage. It’s the best way to not only understand the coverage you currently have, but to discover the coverage you still need.

Please contact us to learn more about obtaining adequate homeowners’ insurance coverage.

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