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3 Crucial Facts about Homeowners Insurance Policies

Guest Post | March 30, 2023

Pexels Binyamin Mellish house - 3 Crucial Facts about Homeowners Insurance Policies

Image: Pexels/Binyamin Mellish

Homeowners insurance can feel like a lifesaver when something goes wrong. If your roof springs a leak in a storm, your insurance policy should help you cover the repair costs. If a burglar breaks through your front door and steals your valuables, your policy should help you replace the items that you lost. And if your house goes up in flames, the policy should help you manage the monumental costs to recover from the disaster — including the costs of temporary accommodations.

Homeowners insurance can do a lot, but it can’t do everything. Learn these three crucial facts about this type of insurance so that you’re fully prepared when disaster strikes.

1. Not All Damages Are Covered

Homeowners insurance doesn’t cover all household damages. One common exclusion from standard policies is overland flooding. If a heavy storm forces floodwater into your basement, you can’t depend on your homeowners insurance to help you with the damages. You’ll have to sign up for a separate flood insurance policy to protect yourself from this circumstance.

These are some more popular exclusions from homeowners insurance:

  • Earthquakes
  • Landslides
  • Hurricanes (in certain states)
  • Pest infestation

2. Not All Costs Will Be Covered

Even when you’re dealing with a problem that’s covered by your policy, your insurer isn’t likely to cover 100% of the costs for repairs and recovery. Why? You’ll be responsible for paying your policy’s deductible.

A standard deductible for homeowners insurance is $1000. In that case, if your repair costs were $6,000, your insurer would only pay $5000 of that total. You would be responsible for the remaining $1,000.

This is why it’s important to have a substantial emergency fund. You can use the savings in your fund to help you pay for the remaining costs without putting a strain on your budget. You’ll be able to stay afloat.

3. The Process Will Take Time

Making a home insurance claim isn’t instantaneous. You won’t get a settlement by the end of the day. First, you’ll need to take time to prepare your claim, and then you’ll have to wait for the insurance company to process it.

Preparing Your Claim

You will need to take some time to assess the damage, estimate costs and take pictures of the scene to provide proof to the insurer. You might also need to arrange for immediate repairs. For instance, if a pipe bursts and floods your basement, you’ll want to contact an emergency plumber to fix that pipe before it causes more damage.

You can use your emergency fund to cover those repair costs before getting an insurance payout. If you don’t have an emergency fund, you should consider an alternative payment option like a personal line of credit. A personal line of credit can give you a certain amount of credit to cover urgent expenses. As long as your account is in good standing, you can repay and redraw as needed — this is extremely useful for emergencies.

Remember to keep the receipts for any repair services you purchase. The receipts will act as evidence for your insurer. Once you have all of this information, you can file your claim.

Processing Your Claim

Once you’ve sent your claim, you’ll have to wait for your insurance company to process it. A claims professional will assess the claim, investigate the damage and estimate the overall costs. They will make you a settlement offer. If you accept that offer, they will arrange the payments with you. They may also send payments to your mortgage lender and any contractors you hire to do repairs.

How long does this take? It can take weeks or even months depending on your state and your insurance company.

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These are some other factors that can extend your insurance claim process:

  • Your original claim is missing important information.
  • You are not answering the insurance company promptly.
  • Your case involves a lot of damage.
  • You want to negotiate the payment terms.

You’ll want to know this information before you have to rely on your homeowners insurance. You don’t want to panic when it comes time to make a claim.


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