Understanding Insurance Policies

2 Questions About Your Homeowner's Insurance

27 October 2016

Samantha Reynolds

With a home being such a big investment, it is important to have insurance that covers anything that goes wrong with the structure. In fact, insurance is required if you get a mortgage, since the home technically belongs to your mortgage lender until your home is paid off in full. When it comes to insurance, you may have a couple questions about what kind of coverage you have. This includes questions about what type of damage is covered, as well as your annual premiums. 

Will My Homeowner's Insurance Cover All Types Of Water Damage?

A mistake that many homeowners make is not having the proper coverage for water damage in their home. There are essentially 3 kinds of water damage that can happen, and they are not all covered under the same policy.

At a basic level, a standard homeowner's insurance policy will cover basic water damage in your home. This could be due to a pipe freezing and bursting in the winter, causing water to go everywhere. It also covers instances where appliances or pipes within your home malfunction, causing water damage in the process.

Sewer backup coverage will be required if you ever have water backing up into your home from the outside. This can be from a municipal sewer system that overflows and leaves water in your basement. It can also be from drain tiles leading to the sewer collapsing, causing your sewage waste to back up into the home. 

Flood insurance will be necessary to cover any type of water that enters your home from the outside. While flooding from a nearby body of water is the most obvious example, it also includes rain water that reaches your home and enters the window wells. 

Why Do My Homeowner's Insurance Premiums Increase Slightly Each year?

You may be shocked to see that your homeowner's insurance premium is increasing year after year. The main reason why this happens is because your home insurance provider accounts for inflation. As the cost of materials to build a home increase, it will become more expensive to fix or rebuild your home in a total loss situation. By increasing your coverage amount to keep up with inflation, it will ensure that your house can be repaired under your policy.

You can request that your insurance provider does not increase your coverage amount, but know that it could lead to you not having enough coverage for a claim 15 to 30 years from now. For more information and options for premiums and coverage, contact different home insurance companies near you, like Germain Insurance Agency.

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