What Does Your Homeowners Insurance Actually Cover?

Homeowners insurance is easy to put on autopilot. But your home, belongings and rebuilding costs can change over time.

A periodic review can help you understand what your policy actually covers before you need to use it.

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Review Your Policy

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Understand the Terminology

One distinction worth knowing is replacement cost vs. actual cash value.

Replacement cost generally considers the cost to replace covered property, subject to the terms and limits of the policy.

Actual cash value generally accounts for depreciation.

The coverage that applies can make a significant difference following a loss, so check your individual policy rather than assuming.

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Document Your Home

A current home inventory can make it much easier to document your belongings if you ever need to file a claim.

Consider keeping:

• Photos or video of each room
• Records for valuable belongings
• Receipts for significant purchases when available
• Documents of major home improvements
• A copy of the inventory somewhere safely away from the property or securely stored digitally

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Don’t Assume Flooding Is Covered

Standard homeowners insurance generally does not cover flood damage.

That distinction is particularly relevant in Indiana following periods of heavy rain and flooding. Flood insurance is separate coverage, and individual risks and needs vary by property.

Other types of water damage can also depend heavily on the cause and the individual policy.

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Questions Worth Asking

Your next insurance conversations could be as simple as:

• What isn’t covered by my current policy?
• Is my home insured for replacement cost or actual cash value?
• Have my renovations or improvements changed by needs?
• How is water or sewer backup handled?
• Do I have an up-to-date home inventory?

You may not need to change anything. Knowing what you have is the point.

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Insurance policies, coverage and individual needs vary. This information is general in nature and is not insurance advice. Consult your insurance professional regarding your specific property, policy and coverage.

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Living Well at Home

From seasonal considerations to thoughtful homeownership decisions, The Homeowner Edit is designed to help you stay informed and plan ahead. For questions about your home, local market or future plans, your Encore Sotheby’s International Realty advisor is here to help.

Encore Sotheby’s International Realty is a boutique residential real estate brokerage providing home sellers and buyers with a luxury level of service in Indiana and beyond. Specializing in the central, northeast and northwest regions of Indiana, the firm operates out of offices in Carmel, Indianapolis, Zionsville, Fort Wayne, and Syracuse. Backed by the world-class Sotheby’s International Realty brand, clients benefit from local expertise with global reach. For all of your real estate needs, call 317.660.4444 or visit encoresothebysrealty.com.