Homeowners insurance covers damages and losses that occur to a home and provides liability coverage for accidents that happen on the property. These protections include coverage for the home’s structure which encompasses damages incurred by fire, hail, or other natural disasters stipulated in the policy. The insurance will also protect other detached structures such as a shed or garage. Some disasters including floods or earthquakes may not be included in a standard policy and will need extended coverage to pay for repairs. The policies also protect a person’s belongings and can potentially cover liability against lawsuits arising from your actions or those of other members of your household. However, depending on the situation, car accidents are not typically covered.
Scenarios where vehicles are covered and not covered
Say that you purchase a new vehicle from your local car dealership and take it home. The car is subsequently parked in the garage and a fire breaks out. While the car is your personal property, a standard homeowner’s insurance policy will not cover this type of personal belonging. The reason is that the idea of car insurance is to cover damages that vehicles sustain; therefore, the car’s insurance policy should pay for the damages. Although the scenario is highly unlikely because of the law, assume furthermore that this car does not have insurance. In this case, if your homeowner’s policy covers uninsured or underinsured motorists, you may have a case for the property to be covered by said home’s insurance policy.
Another scenario where an accident involving a car may be covered by a homeowner’s insurance policy pertains to circumstances that include damage to the property caused by a member of the household. If your child is riding a bike, for example, and hits and damages someone else’s car parked on your property, the damages that the vehicle sustains are covered by your home insurance.
It must be noted that even though the policy protects damages in this scenario, the coverage is limited to negligence and accidents. Meaning, if property is destroyed on purpose, insurance companies will not pay the reparations.
Overview of typical coverages
The purpose of homeowner’s insurance is to protect a person’s property. Most of the policies even cover personal belongings away from the house. However, this area can be tricky. For example, if your vehicle is broken in to and possessions such as golf clubs or a laptop are stolen, the insurance policy for the home will cover the theft. Although these lines are blurry and some automotive coverage packages may also cover the robbery, a home’s insurance contract covers much of the scenarios involving the personal items stolen off-premises.
One area that policyholders may need to obtain more information on is the difference between the cost of replacing an item and fair market value. Different types of personal possessions may depreciate at a faster rate than others. Therefore, the value that an insurance company places on certain items may not be enough to cover the cost of replacing them. To avoid a fair market assessment, coverage would need to include replacement costs that can bridge the gap. Otherwise, the evaluation will be based on the fair market price of the item.
Property owners also need to understand other limitations to these policies. As many New Jersey residents found out after Hurricane Sandy, flood insurance is generally separate from standard coverages. Therefore, those in flood zones looking for homeowners insurance in New Jersey need to ensure that they purchase the additional insurance to protect them from water damage that results from a natural disaster. Some special cases such as those that occured during Sandy may present opportunities to litigate. In such circumstances, it is best to consult with New Jersey attorneys.