What does homeowners insurance cover? The property and liability policy on a house and the people in it: the structure, the contents, somewhere to live while a covered loss is repaired, and the owner's liability.
Homeowners insurance is the policy an owner carries on a house they live in. The standard form for a detached home is the HO-3, and it is built from six coverages: A, the dwelling itself; B, other structures such as a detached garage or a block wall; C, personal property; D, loss of use, which pays for somewhere to live while a covered loss is repaired; E, personal liability; and F, medical payments to others. Coverage A on an HO-3 is written on an open perils basis, so anything the policy does not exclude is covered, while personal property is covered only for the perils the policy names. A condominium unit is insured on the HO-6 form instead, and a tenant on the HO-4.
What is excluded matters as much as what is not. Flood and earthquake are outside a homeowners policy anywhere in the country and each is bought separately. Wear, settling, pest damage and deferred maintenance are excluded because none of them is sudden. Mold is commonly excluded or capped by endorsement, commonly at $5,000 to $10,000, unless it results from a covered sudden event such as a burst supply line. Every loss is settled after a deductible, commonly $1,000 to $2,500 or a percentage of the dwelling limit. This is general information rather than insurance advice: the policy and its endorsements are the document that decides a claim, and the agent who wrote it is who to ask.
A lender requires the coverage for as long as there is a loan, calls it hazard insurance in the loan documents, and commonly collects the premium monthly through the escrow account and pays the renewal out of it. Premiums in the Las Vegas valley commonly run below the national average, because there is no hurricane exposure, little hail and, in the valley itself, little wildfire; commonly $800 to $2,000 a year for a single-family home, set by the cost to rebuild, the deductible, the age of the roof and the claims history on the house. The Nevada Division of Insurance regulates the carriers and licenses the agents, and it is where a complaint goes after the carrier's own appeal has been used.
A worked example
A house with a $2,400 annual premium and $3,600 of property taxes adds $500 a month to the payment through the escrow account. A supply line then bursts and does $30,000 of damage: with a $1,000 deductible the policy pays $29,000, and of the $6,000 of mold remediation behind the wall the endorsement covers $5,000, so the owner is $2,000 out of pocket in all.
Put insurance and taxes into a monthly payment
Questions people ask
Is homeowners insurance required?
Not by Nevada law, but by every lender for as long as the loan exists, and the requirement is written into the deed of trust. An owner with no mortgage carries it by choice, and dropping it puts the entire rebuild cost back on the owner.
Does homeowners insurance cover the roof?
It covers roof damage from a covered sudden event such as wind, and not a roof that has reached the end of its life. Many policies now settle an older roof at depreciated value rather than the cost of a new one, which is a line on the declarations page worth reading before a claim.