You may be familiar with how important homeowners insurance policies are, but do you know how often they pay out and what categories cause the most damage?
Today, we will discuss how homeowners insurance fulfills claims and provide a list of the most common damages that homeowners face.
The Value Of A Homeowner’s Insurance Policy
If you have a mortgage, your lender probably requires you to have a homeowners insurance policy. Homeowners insurance will pay for damages and repairs depending on what coverage you have.
Even if you do not have a mortgage, a homeowner’s insurance policy is still an excellent way to shield your home and finances from disaster. Imagine you didn’t have any dwelling coverage during an ice storm, and your roof collapsed. This is an extreme example, but you would have to foot the bill for the entire repair without coverage.
However, if you have homeowner’s insurance, a major repair like this would easily meet your deductible, and you wouldn’t have to pay any more out of pocket.
Most Common Claims
Since homeowner’s insurance is so important, we should look at some of the most common claims to help determine what coverage level is best for you and your household.
Whether it’s a hailstorm or a break-in, you want to make sure you are covered against these perils:
- Hail and Wind
Damage from hail and windstorms makes up almost a quarter of all homeowner’s insurance claims, and it is easy to see why. This category also accounts for damages caused by hurricanes, which can be devastating to your home. Protecting against hail and wind is especially important for homes in cooler climates where hail can be a regular occurrence.
If you are considering a new homeowner’s insurance policy, then make sure you opt for enough coverage to repair significant hail and wind damage.
- Fire and Lightning
Although fire and lightning damage is not as common as hail and wind, they are much more expensive and catastrophic. The average fire damage claim is around $80,000, which is immensely expensive and generally reflects the high cost of both repairing your home and replacing your personal property and possessions.
Thankfully, most insurance providers offer excellent fire coverage, so finding a policy should not be difficult. Even if you have fire coverage, it’s best to make sure you practice fire safety and keep fire extinguishers up to date.
- Freezing and Water Damage
Few events are as shocking or damaging as to find out a pipe has frozen or burst and flooded your home or basement with water.
Fortunately, these claims are generally less common and expensive, and they are less dangerous than a fire or hurricane.
If you do not know your pipes and water heater condition, you may want to perform a checkup
to ensure they are up to code and stable for winter.
- Property Damage (Non-Theft)
Non-theft property damage covers a vast array of potential damages, including trees falling onto your home, cars crashing into your property, or even a meteor crashing through your roof. Many insurance policies offer a generous amount of coverage for property damage, so most standard homeowner’s policies should be sufficient.
Although insurance will generally cover most qualified property damage, you should check your trees and other property to see if you could be held negligent for damages incurred. For example, if there is a dead branch dangling over your roof, it would be best to remove it prior to falling.
Liability claims are not very common, but they can be extremely expensive, with the average liability payout being $30,000 – second to fire. Common liability claims arise when someone incurs an injury on your property or requires medical care.
Although predicting potential liability can be next to impossible, you can make sure there are not any exposed sharp nails or that your deck is in good condition.
Theft is thankfully the least common and least expensive of the major claim payouts. Theft is also easier to mitigate through a variety of tools, including home security systems, bright outside lights, dogs, and more.
One of the key takeaways from this post should be that all of the top claims payouts usually pay for the annual insurance premium for many years. Although it’s impossible to prevent every eventuality, preparing by having adequate insurance is a huge step in the right direction.
If you want to learn more about homeowner’s insurance or find some of the top insurance providers on the market, please check out our other guides and reviews!
* This content is not provided by the financial institution or the offer’s provider. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and does not constitute a financial or expert advice.