Category: Home Insurance

  • Umbrella Insurance: Who Needs It and How It Works

    A serious accident or lawsuit can cost far more than the liability limits on your auto or homeowners policy. Personal umbrella insurance adds an extra layer of protection, often starting at $1 million, for a relatively modest premium.

    How umbrella insurance works

    An umbrella policy kicks in after the liability limits of your underlying policies are used up. For example, if you are found responsible for $700,000 in damages after a car accident and your auto policy covers $300,000, your umbrella policy can pay the remaining $400,000, up to its limit.

    What it covers

    • Bodily injury and property damage liability above your auto and home limits
    • Some claims your other policies may not cover, such as libel, slander and false arrest
    • Legal defense costs, often in addition to the policy limit
    • Liability involving rental properties, boats and recreational vehicles, when listed

    What it does not cover

    Umbrella policies do not cover your own injuries or damage to your own property, business activities, or intentional acts. Business owners need commercial coverage.

    Who should consider it

    • Homeowners and people with significant savings or investments
    • Families with teen drivers
    • Owners of pools, trampolines or dogs
    • Landlords with rental properties
    • People with a high income or a public profile

    Requirements

    Insurers usually require minimum liability limits on your auto and home policies before selling an umbrella policy, for example 250/500 on auto and $300,000 on home. Buying all policies from the same company can make this easier and may qualify you for a discount.

    Learn more about the policies underneath an umbrella in our auto and homeowners guides.

    This article is for general information only and is not insurance, legal or financial advice. Rules and prices vary by state and insurer. Check your policy and talk to a licensed agent before making changes.

  • What Does Homeowners Insurance Cover (and What It Doesn’t)?

    What Does Homeowners Insurance Cover (and What It Doesn’t)?

    Many homeowners only discover what their policy covers after something goes wrong. Understanding your coverage before a loss helps you avoid unpleasant surprises and expensive gaps.

    The six main coverages in a standard policy

    Most U.S. homeowners have an HO-3 policy, the most common type for single-family homes. It usually includes six parts:

    1. Coverage A, dwelling: the structure of your home.
    2. Coverage B, other structures: fences, sheds and detached garages.
    3. Coverage C, personal property: your belongings.
    4. Coverage D, loss of use: additional living expenses while your home is repaired.
    5. Coverage E, personal liability: injuries or damage you cause to others.
    6. Coverage F, medical payments: minor injuries to guests.

    Commonly covered events

    Fire and smoke, windstorms and hail (in many states with a separate deductible), lightning, theft, vandalism, the weight of snow and ice, and sudden, accidental water damage from plumbing are typically covered.

    Common exclusions

    • Flooding: excluded from standard policies. Flood insurance is available through the NFIP and private insurers, usually with a waiting period before it takes effect.
    • Earthquakes and earth movement: require a separate policy or endorsement.
    • Sewer backup: often excluded unless you add an endorsement.
    • Gradual damage: slow leaks, rot, mold and wear and tear.
    • Pests: termites, rodents and insects.
    • Business activities: home businesses often need separate coverage.

    How to fill the gaps

    • Check FEMA flood maps and consider flood insurance even outside high-risk zones.
    • Add a scheduled personal property rider for jewelry, art and collectibles.
    • Add water backup coverage if you have a finished basement.
    • Consider an umbrella policy for extra liability protection.

    Keep a home inventory

    Photos, videos and receipts make claims faster and easier. Store them in the cloud so they are safe if your home is damaged. Learn more in our homeowners insurance guide.

    This article is for general information only and is not insurance, legal or financial advice. Rules and prices vary by state and insurer. Check your policy and talk to a licensed agent before making changes.