Lawyers Share 10 Things They Wish Everyone Knew About Home Insurance

A homeowners insurance (HOI) policy offers protection for those who own their home. If your house is damaged by a covered event, you can file a claim with the insurance company to help pay for repairs. 

Generally, mortgage lenders require homeowners to purchase this type of coverage, which you might pay monthly or annually through your escrow account. 

Even if you can technically skip having a homeowners insurance policy after paying off your mortgage, that’s generally considered a financial mistake.

Since your home might be your single biggest asset, it’s important to understand the ins and outs so that you end up with the right coverage when you need it. We explore some of the things lawyers wish everyone knew about this type of insurance policy.

Although homeowners insurance can help you rebuild after a covered event, not every disaster is covered. It might come as a surprise to many that flooding isn’t usually covered under a standard home insurance policy.

“One of the most important things to know about home insurance is that it doesn’t cover everything,” says Ben Michael, attorney at M&A Criminal Defense Attorneys.

“It typically doesn’t offer flood protection, for example, so flood insurance is usually something homeowners will need to purchase separately, especially if they live in a flood zone.”

Whether you planned on renting out your house, or became an accidental landlord due to changing life circumstances, a standard home insurance policy likely won’t include the necessary coverage.

“Another example is if you rent out a property that you own, home insurance isn’t going to cover you as you need,” says Michael.

“While standard home insurance policies cover things like liability and building and personal property damage, it only covers those things when the property is actively being occupied by the property owner,” he continues. “So, if you rent out your property, you will need landlord insurance.”

Homeowners insurance policies come with some level of liability coverage, which can protect you if someone is injured on your property. But, the baseline liability limits might not be enough.

“The default liability limits are usually not enough to protect you from a large claim,” says Josh Rohrscheib, owner and managing attorney at Onward Injury Law.

“This is something we run into all the time, and adding additional coverage here does not increase your premiums that much,” Rohrscheib continues. “It is absolutely worth it to protect your assets.”

When picking a home insurance policy, consider bumping up your liability limits to enhance your protection.

Some policies include medical payment coverage to others in the fine print. Other policies don’t. Without this coverage, you could be on the hook for medical bills after an incident on your property.

“See if you have ‘Medical Payments to Others’ on your policy. If you don't, add it!,” says Rohrschieb.

“The cost is minimal, and this can really come in handy if a friend, family member, or guest suffers a minor injury on your property, without the hassle of a lawsuit or larger claim,” he continues. “We always recommend adding whatever amount of Medical Payments (or MedPay) that you can reasonably afford.”

Within the fine print of your insurance policy, you’ll find what’s covered and what’s excluded from your policies.

“Know what your exclusions are, and consider additional coverage to safeguard against certain risks,” says Rohrscheib.

For example, if you have a pool in your backyard and someone gets injured while in the pool, Rohrscheib says that your insurance policy may have an exclusion for those claims, which is something a lot of people don’t realize.

“Look into adding additional coverage specific to the pool (or whatever it may be),” Rohrscheib says. “This is typically referred to as ‘special risks’ coverage, and it is worth considering and discussing with your agent.”

When getting a quote for a home insurance policy, it’s critical to be honest about your situation.

“'Do not lie on an insurance application,” says Michael J. Marotte, co-chair of Corporate and Business Law Practice Group at Schenk, Price, Smith & King LLP.

“This is true for a homeowner’s policy and any other type of insurance coverage,” he continues. “A misrepresentation on an application for insurance, even an innocent misrepresentation, is grounds for rescinding the policy ab initio.” And that’s not all, according to Marotte, rescission is allowed even if the misrepresentation is unrelated to the loss you’re seeking coverage for.

Ultimately, providing false information to your insurance company could mean you aren’t covered when you need it.

When your home incurs damage, you may have a lot of things going on at once. Although filing a claim adds to your plate, it’s best to tackle this task sooner rather than later.

“Homeowners frequently wait too long to notify their insurer of the loss, thinking they need to first assess the damage themselves,” says Chad D. Cummings, attorney and CPA at Cummings & Cummings Law.

“In the aftermath of the recent hurricane season, some policyholders missed crucial deadlines imposed by their policies or failed to document immediate damage, leading to disputes over whether certain losses were caused by fire or subsequent weather conditions,” he says, highlighting just how big of an issue this can become.

If your home is damaged, it’s tempting to jump right into the repair process without delay. But before you dive in, documenting the damage is critical. Without sufficient documentation, your insurer might deny your claim.

“A common and costly mistake is failing to thoroughly document damages before initiating repairs or debris removal,” says Cummings, noting that insurers frequently rely on policyholder-provided evidence to adjust claims.

“After the storms passed, many homeowners did not take sufficient photos or videos of their destroyed homes, making it difficult to contest lowball estimates or improper depreciation deductions.”

If your home is significantly damaged, you might not be able to live in the property while repairs are completed. Many home insurance policies include coverage for additional living expenses, which might help you pay for temporary accommodations.

“Many homeowners are unaware that their policies cover more than just the cost of their home’s repair or reconstruction — they also cover necessary living expenses incurred due to displacement,” says Cummings.

But, that doesn’t mean that you don’t have to do some legwork to get it covered. According to Cummings, some victims from Hurricane Helene failed to properly track their temporary housing, food, and transportation costs, leading insurers to dispute or deny those claims. “Keeping detailed records and submitting timely requests is crucial,” he adds.

For homeowners who see their homes damaged beyond repair, rebuilding costs might be a shock. That’s especially true if building codes have changed since your home was originally built.

“Many homeowners assume their policy will cover the full cost of rebuilding their home to current building codes,” says Cummings. “However, standard policies often exclude or severely limit coverage for code-required upgrades.”

In Sarasota, Florida, for example, Cummings says that many homeowners discovered that new building codes required expensive energy-efficiency upgrades, yet their policies provided little to no coverage for these costs. “Reviewing and negotiating policy terms before a loss occurs can prevent this financial shock.”

Homeowners insurance is an unavoidable expense for many homeowners. Although an extra cost, this type of policy can help you protect your wealth by protecting your home’s value.

Get clear on the fine print now to avoid extra heartbreak after a disaster, and make sure to frequently review your HOI policy to ensure that your coverage stays current and matches your changing needs.