Remember to always consult directly with your insurance providers, as we are not licensed to sell or offer insurance.
Homeowners insurance is one of the most important, and often misunderstood, aspects of property ownership. Especially in 2026, with rising construction costs and shifting climate risks, staying informed can save you thousands in out-of-pocket expenses.
Here is what every homeowner should know to ensure they are actually protected.
1. Replacement Cost vs. Market Value
One of the most common mistakes is insuring your home for its market value (what you could sell it for).
- Insure for Reconstruction: You should consider insuring your home for what it would cost to rebuild from scratch at today’s labor and material prices. This often differs significantly from the real estate price.
- Guaranteed Replacement Cost: Look for policies that offer "Extended" or "Guaranteed" replacement cost. This provides a buffer (often 20% or more) if a major disaster spikes local construction costs beyond your policy limit.
2. The "Big Three" Exclusions
A standard homeowners policy (typically an HO-3) does not cover everything. You usually need separate policies or "riders" for:
- Floods: Standard insurance never covers flooding from rising external water. You must buy a separate policy through the NFIP or a private insurer.
- Earthquakes: Ground movement is almost always excluded and requires a specific endorsement.
- Sewer Backup: If your sump pump fails or a sewer line backs up into your basement, a standard policy won't cover the damage unless you’ve added a Water Backup Endorsement.
3. Coverage Types You Need to Know
|
Coverage Type |
What it Actually Protects |
Examples in Action |
|
Dwelling (A) |
The physical "shell" of your house, including the roof, foundation, and anything permanently attached. |
Rebuilding your house after a fire or replacing a roof crushed by a tree. |
|
Personal Property (C) |
Your portable belongings (clothes, electronics, furniture). This covers them even if they are away from home. |
Replacing a laptop stolen from your car or luggage lost while you're on vacation. |
|
Liability (E) |
Your financial assets if you are sued or held responsible for someone else's injury or property damage. |
Paying legal fees if a guest slips on your patio or if your dog bites someone at the park. |
|
Loss of Use (ALE) |
Your temporary lifestyle expenses if a disaster forces you to move out during repairs. |
Paying for a rental house, hotel stays, and the "extra" cost of restaurant meals while you can't use your kitchen. |
4. High-Value Items Need "Scheduling"
Standard policies have "sub-limits" for certain categories. For example, your policy might cover $50,000 in total personal property but only $1,500 for jewelry or fine art.
-
The Fix: "Schedule" these items individually. It costs a bit more but ensures you get the full value if they are lost or stolen, often with no deductible.
5. Tips for 2026
- Ordinance or Law Coverage: If you have an older home, this is vital. It pays for the extra cost of rebuilding your home to current building codes (like new electrical or insulation standards), which standard policies don't cover.
- The "Home Inventory" is Mandatory: In the event of a total loss, you must prove what you owned. Walk through your house today and take a video of every open drawer and closet. Store that video in the cloud.
- Bundling & Mitigation: You can often save 10–20% by "bundling" home and auto. Additionally, upgrades like impact-resistant roofs or smart water-leak sensors can trigger significant discounts.
Consult with your insurance agent for more details.
Thinking of Selling or Buying in 2026?
If you’re planning to sell or purchase a home and would like to talk through your plans, we’re always happy to have a complimentary conversation.
Caviness, Straub & Associates
📞 (650) 288-3230
📧 [email protected]
Brett Caviness // DRE01935984
Don Straub // DRE01896844
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