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Knowledge Mondays - What Does Homeowners Insurance Cover?


Although homeowners insurance is important, many Americans do not know what it is and what it covers.


The most common policy sold to homeowners is the HO 3 policy form, or as it is generally known, an all risks form. While the form varies by company, generally, an HO 3 policy will cover damage to property unless it is specifically exempted or excluded.


Common exclusions in an HO 3 form are:


  1. Flood;

  2. Earth Movement;

  3. Intentional Loss.


Common exemptions to coverage are:


  1. Wear and tear;

  2. Settlement;

  3. Mechanical breakdown.


While a particular peril may be exempted, an ensuing loss may be covered by an HO 3 policy. A common example is a water pipe that bursts due to wear and tear. The pipe itself may not be covered but the ensuing water damage may be.


Insurance policies should be reviewed yearly to ensure that you are properly covered in the event of a loss.

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