Insurance Guide Blog

A home insurance policy is a contract between an insurance company and a homeowner that protects the homeowner from financial losses that can result from damages to the structure of his dwelling and to the possessions stored in that dwelling. There are many different types of home insurance policies. A typical policy covers a wide variety of potentially costly damages to the house, the garage, and other structures on the property, such as storage units. Personal possessions covered in most insurance policies include furniture, appliances, clothing, and items stored in the garage (such as bicycles and power tools). Home insurance policies also cover injuries suffered by visitors to the property. For example, if a guest cut herself on the host’s chain-link fence and required stitches, the medical expenses would be covered by the host’s home insurance policy (assuming it was established that the injury was not caused by negligence on the part of the host or the guest).

The extent of the perils covered by a home insurance policy depends on the type of policy, but a typical policy will protect against windstorms, fire, and theft. Most people purchase “all-risk” (also called “open-peril”) homeowner’s insurance, which protects against all perils except those specifically excluded in the policy. All-risk policies often exclude damages caused by floods and earthquakes; protection from these natural disasters can be purchased separately. Most homeowner’s policies do cover damages resulting from volcanic eruptions and hurricanes, but the deductible for hurricane damage is usually quite high. (A deductible is a previously agreed-upon amount of money that the homeowner has to pay toward the repairs before the insurance company makes its contribution.) The deductibles for hurricane and storm-related damage are larger in high-risk areas such as the Gulf Coast states, which include Texas, Louisiana, Mississippi, Alabama, and Florida. Damages caused by war are excluded from all policies.