Home Insurance 101

Get answers to your home insurance questions

by Kristin Smith

You purchased your home insurance to protect what is likely your largest investment – your home. But do you understand what’s covered by your policy? If your home were damaged by a storm, fire or other covered incident, would you be confident that your insurance protection would allow you to restore it? 

Let’s look at some common concerns homeowners have. 

What if my home was destroyed and I needed to rebuild? Would I be able to? 

Your basic home policy should cover things like wind or fire damage. However, you need to check what type of replacement coverage you have in case your home is completely destroyed. These coverages are often available to you, usually at an additional cost. Consider these two examples: 

Additional replacement cost coverage 

A good option for newer homes due to age requirements¹, this coverage has no maximum and provides coverage regardless of the limits on the home policy. With this coverage added to your policy, if you have a $250,000 home, but the cost to rebuild when it was destroyed is $325,000, you’ll be able to rebuild at the $350,000 expense without added cost to you. If you live in AL, GA, or TN, this coverage is capped at 125%. 

Extended replacement cost coverage 

Regardless of how old your home is, you can get this type of replacement coverage that pays up to 120% of the coverage limit you selected for your policy. Using the same example from above, if you have a $250,000 home, but the repair or rebuilding cost was $325,000, you would be covered up to $300,000 (120% of $250,000). The extra $25,000 reconstruction cost would need to come from your savings, a second or adjusted mortgage, or other sources. With this type of coverage, you should review your policy annually with your representative to ensure that 100% - 120% range will provide the necessary money to keep up with rebuilding costs in your area. 

I treasure my wedding ring and want to be sure it’s protected. If something happened to it, would it be covered by my home insurance?  

A home policy covers personal property up to a certain amount, but that usually only covers “average” home contents like furniture, clothing and other personal possessions. If you have high-value personal items, like jewelry, artwork, coin collections or other valuables, work with your representative to list these items on your policy. You’ll likely pay a little extra for coverage, but if the diamond falls out of that wedding ring or, worse, the ring gets lost or stolen, it will be worth the extra cost. 

What about water damage? Would I be covered if my home was damaged in a flood? 

You need to know that most home insurance policies will not provide coverage if your home is damaged by flood. However, if you live in a community that takes part in the National Flood Insurance Program, you can buy flood insurance protection. Most flood insurance is provided through the federal government, and authorized insurance agents can help you access the coverage. 

Not sure if you qualify? Visit the flood insurance program page at fema.gov to find out and talk to your agent.  

If my sump pump stops working in the middle of a rainstorm, would that water damage be covered by my home insurance? 

Your basic home insurance policy will not provide coverage, but if you have the Sump Pump Failure and/or Back-up of Sewer or Drain endorsement, you’ll have some protection. When your sump pump fails or a rock blocks your drain causing water to back up, you need to have a specific sump pump failure or sewer backup endorsement to be covered.  

What if I run my business from my home, do I need extra coverage? 

Standard home insurance policies will not cover a business. You will need commercial insurance coverage if you have your business in your home, especially if that business includes expensive equipment that would need to be replaced. 

We can’t possibly cover every question here, but your representative can help make sure you have the protection you need. Review your policy with your representative regularly. Be sure to discuss the features of your home that may need coverage options, like our metal roof endorsement to cover cosmetic damage to a metal roof. You may also qualify for ways to save money with options like our Smart home or Multi-policy discounts. ²   

Each state could have different rules about these coverages, so when you talk to your representative, ask questions to get a thorough explanation of exactly what protection your policy provides.