Homeowners Insurance – What is Covered and What is Not in Basic Policy?

By Adams Bridges

The mortgage lender requires you to purchase a basic homeowners insurance before lending you the money. The standard policy coverage may not be adequate for your specific needs. In this case you can buy homeowners insurance policy from a provider other than the one your lender recommended for you. Insurance is a competitive industry and it is up to you to take advantage of shopping around to get the best deal. But, bear in mind good deal doesn't mean cutting corners and you should put quality first.

The basic homeowners insurance protects you against certain number of perils. The policies coverage differs according to the homeowners insurance provider. The majority of companies cover your home structure and contents against any damage due to fire, smoke, unforeseen burst or frozen water pipes, unexpected air conditioning system failure, hail, weight of ice, snow, sleet, falling object such as a tree causing the roof to collapse, burglary, vandalism, riot, unrest , damage related to vehicles, and one natural disaster: volcanic eruption.

The basic policy does not cover the most natural disasters. The common homeowners insurance exclusions are earthquake and hurricane damage. After hurricane Katrina, insurance companies raised the insurance rates or stopped insuring homes in the gulf coast states at all. If you in the market for homeowners insurance and your property in hurricane-prone area, you should purchase hurricane rider. The earthquake coverage is not included in the standard policy. If you are a resident of earthquake-prone regions such as California, you are compelled to buy endorsement or a separate earthquake policy.

Homeowners insurance carriers offer a special policy for older home. The older homes are more vulnerable to damage than the new ones. Electrical and plumbing systems in older properties are not up to date and do not meet current code requirements. The insurance companies increase your rate if you own older house. In case you file a claim the company will reimburse you for your loss on the basis of actual cash value not replacement cost due to older property depreciation.

You should know the Basic homeowners insurance coverage limits and what perils not covered in your policy.