The majority of homeowners across the country carry insurance on their properties. They need to according to the language of their mortgage agreements. I plan to continue my homeowner’s insurance even after my mortgage is paid off. Why? Because natural disasters, burglary, and other harmful things will keep happening.
We understand the idea of ensuring against natural disasters. If a tree falls on my house and damages the roof, the repair bill could be quite expensive. My insurance covers it. But what about theft? What if a burglar ransacks my home or steals the bicycles my kids left lying in the backyard? I am hoping my insurance will cover the theft.
The General Rule for Homeowners Insurance
Fortunately, the general rule for homeowners’ insurance is that burglary and theft are covered. However, few policies cover 100% of a homeowner’s losses. There are monetary limits on most policies. Homeowners are also responsible for their portion – a.k.a., the deductible.
According to The Zebra, insurance companies draw a line of distinction between theft committed inside the home and similar actions outside. They also tend to place limits on thefts of personal property outside the home.
Inside, it is not such a big deal. Items inside your home are generally considered secure from burglars. A burglar needs to make a concerted effort to break in and steal. But items left outside are less secure. Therefore, there may be limitations with a particular insurance policy.
Thefts Outside the Home
Also understand that thefts outside the home are divided into multiple categories. There are thefts that take place on your property, thefts from inside your car, and even thefts that take place while you are traveling. Homeowners insurance varies in terms of how it covers these thefts.
A typical homeowner’s policy pays (per incident) 10% of the homeowner’s total personal property coverage or $1000, whichever is greater. This sort of thing would typically apply to items stolen from your car, suitcases stolen while you travel, or even your cell phone being swiped at a local restaurant.
Things Insurance Doesn’t Cover
Insurance companies build limits into their policies for obvious reasons. They cannot cover everything and still offer affordable rates. So what doesn’t a typical policy cover? For starters, insurance companies tend to avoid covering vacant homes. So if you own a second home that is occupied, the policy you have on your main home isn’t going to cover theft.
Homeowners’ insurance also doesn’t cover losses experienced by a tenant in a rented home. A tenant’s possessions are covered by his renter’s insurance. Finally, homeowners will not cover losses if it is deemed that said losses occurred due to homeowner negligence.
Beefing Up an Insurance Policy
For my money, it is worthwhile to take some extra steps to beef up my insurance policy. For instance, some insurance companies offer a discount for installing a home security system. Monitored security from a provider like Vivint Smart Home is even better. Not only do I save money on my insurance, but I also reduce the chances of being found negligent in the event something does happen.
The more I harden my home against potential losses, the more valuable my insurance policy becomes. My insurance company has less wiggle room when I can prove that I have taken every necessary step to avoid loss. So that is what I do.
As a general rule, homeowners’ insurance does cover theft. It even covers thefts outside the home, at least to some degree. That’s good to know. It is also motivation to continue carrying insurance even after a house is fully paid for.