For many in America, their home is their biggest investment: it is the most expensive thing they own, they often invest in improvements to increase value and it is completely central to their day to day life. What are some of the ways in which homeowner’s insurance helps to mitigate the risks associated with owning such a large investment, and how do insurance agencies try to deny homeowners claims?
Before a lender will finalize a mortgage, they will typically require the buyer to take out a hazard insurance policy. This typically covers losses related to unintentional damage by smoke, fire, hail, wind, vandalism, theft or similar events. Remember, however, that this is a very minimal level of coverage to offer protection to the mortgagor, and that it is often a good idea to get more coverage to protect your investment.
Homeowners Insurance will typically cover not only the house, but also some of the items within and adjacent structures. This will usually include items like furniture, and structures like a garage, pool or shed. It will usually not, however, cover businesses, such farming machinery or other business equipment.
An important aspect that is often not appreciated is liability: homeowners insurance will also typically cover certain types of personal liability, such as accidents resulting from negligence on your property. This can include things such as a slip and fall or an injury on the very fun, but also very dangerous, trampoline or bounce house.
This is often where there will be additional requirements, however, such as installing safety equipment, or your policy may specifically exclude trampolines and other activities that carry higher risk. Insurance companies know what sort of injuries tend to happen on what sort of properties. They will typically be looking to limit their own liability by limiting their coverage of some of the more common, or more expensive, sort of injuries.
Basic homeowner’s insurance will often not, however, cover equipment that is used in business (i.e. a landscapers tools stored in the shed) or damage caused by natural disasters such as a hurricane or earthquake. There are, however, some additional policies above and beyond the usual policy that would, and so it is important to find a policy that is not only right for your home, furniture and structures, but also right for your region.
Another hole in coverage is intentional bad acts. This may not be particularly surprising: if you intentionally attack someone on your property, or intentionally damage your property through property destruction or vandalism or intentionally cause other injuries, your policy will not cover it.
“It is important to understand what your policy will cover, and what it won’t,” said Miguel Palmeiro of the law office of Miguel Palmeiro. “In addition, it’s important to remember that homeowner insurance, like almost every other type of insurance, is a business: they want their monthly premium, and they do not want to pay for any damages which are avoidable. What this means is that, if there are any cracks in the system where your particular case falls, they will aggressively try to push your damages into them and deny payment.”
“Remember: these are large companies with a lot of financial leverage that can afford to drag matters out in court while your home remains unrepaired if they think they can win. This is not to say that homeowners insurance is a bad idea, it’s actually a very intelligent investment that will come in handy if you get sued for an injury on your property within your coverage. Just like when shopping for anything else though, it pays to be an informed consumer, especially when you’re banking your future on this investment.”
If you have any questions about homeowners insurance, or are currently fighting with your insurance company, please stop by for a free consultation. Remember, the advice is free, and even a brief conversation with a knowledgeable attorney can help clarify a complicated and often confusing process