Homeowner's Insurance: Frequently Asked Questions
Your home is probably your biggest purchase, and homeowner's insurance protects it. Here are answers to frequent questions.
What does homeowner's insurance cover?
A standard policy generally covers the structure of your home, other structures such as a detached garage, your personal belongings, additional living expenses if you cannot live at home after a covered loss, and personal liability if someone is injured on your property. Coverage applies only to the causes of loss the policy names.
What is typically not covered?
Standard policies often exclude flood and earthquake damage, and may limit coverage for sewer backup, mold, or wear and tear. Flood coverage is usually bought separately. Check your policy and ask your agent about any gaps.
What is the difference between replacement cost and actual cash value?
Replacement cost pays what it costs to repair or replace an item with a new one. Actual cash value subtracts depreciation, so it pays less. Replacement cost coverage costs more but usually leaves you in a much better position after a loss.
How much dwelling coverage do I need?
Base it on the cost to rebuild your home, not its market value or what you paid. Land value is not part of rebuilding. Review the amount regularly, since construction costs change.
Should I document my belongings?
Yes. Take photos or video of each room, keep receipts for major items, and store the records somewhere other than your house, such as in the cloud. Good documentation speeds up a claim.
Is homeowner's insurance deductible?
Not for a home you live in. If you rent out part of your home or use part of it for business, a portion of the premium may be deductible, as part of the rental or home-office rules. Ask us how this applies to you.
Can a casualty loss be deducted on my taxes?
Under current federal law, personal casualty loss deductions are limited to losses from federally declared disasters, and insurance reimbursements reduce the loss. The rules can change, so check irs.gov or ask us before relying on a deduction.
How can I reduce my premium?
Raise your deductible if you can afford it, bundle policies, install security and safety devices, maintain your roof and systems, and compare quotes periodically.
Questions about the tax side of owning a home? Reach out to us and we can help.
This article is general information, not tax, legal or investment advice for your specific situation.