North Carolina’s median home value is more than $200,000. In populated areas like Chapel Hill, Raleigh and Durham this value is even higher. Urban and suburban home buyers can expect to pay in the neighborhood of $300,000+ for their properties.
Still, regardless of location or cost, any damage to your home might deal you a financial blow. An important solution to these losses is going to be your homeowners insurance. Still, while your policy might provide considerable help, it will have conditions attached. Always review your coverage to make sure you know when it will and won’t cover structural damage.
How does homeowners insurance cover structural damage?
People buy homeowners insurance to protect their investment in a property. It will offer financial help after unexpected hazards that damage your property or belongings. It will therefore help you repair your home without spending an arm and a leg.
Your policy will list when it will pay for certain damage. Some of the hazards it might insure you against include:
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Fires
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Theft & Vandalism
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Severe weather
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Falling objects
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Burst pipes
Most policies clearly state when they will and won’t cover your household damage. As long as the policy covers the source of the damage, then it can help you repair or rebuild your home. Still, all policies will limit when they will pay, what they will pay for and how much they will pay for your losses.
Insuring the Dwelling and Detached Structures
In your homeowners policy, you can receive coverage for both your main dwelling and other structures on the property. Your main dwelling is the house you live in. Other structures might include storage sheds, detached garages, carports, gazebos or fencing.
Dwelling coverage and other structures coverage are separate portions of your homeowners insurance. Insurers often refer to dwelling insurance as Coverage A and other structures coverage as Coverage B. Each will contain its own coverage limits and deductibles. Therefore, you’ll have to approach each type of insurance separately.
How Much Your Coverage Will Pay
When enrolling in your homeowners policy, you will choose a dwelling coverage limit. This is the maximum amount your policy will pay you for damage to your home.
You will want your dwelling coverage limit to reflect the amount of money you would need to rebuild your home following a total loss. This is the home’s replacement cost value (RCV). It might include the cost of construction, labor, materials and other factors. Most of the time, your policy will compensate you based on the RCV when you file a damage claim.
Keep in mind, however, that the RCV is not the same as the price you paid for the home. You should work with your agent to appraise the home to choose the right dwelling limits. You might need to periodically your limits as the value of construction and materials in your local market change.
Your maximum other structures insurance limit will likely be a percentage of your dwelling coverage. For example, though you might have $250,000 in dwelling insurance, you might only receive up to $25,000 (10% of $250,000) on other structures coverage. However, some home insurers offer expanded coverage endorsements for other structures. Endorsements can increase your other structures coverage to levels suitable to your property.
Deductibles Will Apply
Even with dwelling and other structures coverage, you will still have your own cost obligations for damage. Most policies require you to pay a certain portion of your damage costs on your own. This is your policy deductible.
For example, your dwelling coverage might have a $1,000 property damage deductible. So, if severe weather damages part of the home, you will pay the first $1,000 of your damage costs. Your insurer will pay the rest of your damage repairs. If you have $10,000 in structural damage, then you must pay the first $1,000 and your policy will pay the remaining $9,000.
If the cost of your deductible is more than the cost of your household damage, then your policy might not pay at all. Therefore, always choose a deductible you can afford to pay on your own.
Exclusions Will Exist
All homeowners policies will include restrictions on when they will pay for damage. Common reasons your policy might not pay include:
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If damage occurred in a hazard not covered under your policy. For example, most policies won’t cover flood damage when flooding results from a weather event. You’ll have to buy separate coverage through flood insurance for this protection.
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The property owner intentionally damages the home or causes damage while committing a crime.
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When normal wear and tear are the primary causes of damage. It is the homeowner’s responsibility to pay for these repairs in their own time.
Still, even though your homeowners policy might include these restrictions, you might be able to get coverage endorsements that can include expanded coverage for niche hazards. Therefore, you’ll have more coverage in the event of sudden losses.
