Homeowners Insurance

Homeowners insurance is a package policy that usually covers the house itself, other structures like a detached garage, personal belongings, extra living costs if you have to move out during repairs, and personal liability if someone is hurt on your property. What it pays for depends on the listed perils and exclusions in your policy. Flood and earthquake damage, for instance, are commonly excluded and require separate coverage.

One of the biggest differences between policies is how losses are valued. Replacement cost coverage pays what it costs to repair or rebuild today. Actual cash value coverage subtracts depreciation for age and wear. The Texas Department of Insurance gives the example of a $10,000 roof replacement with a $4,000 deductible: a replacement cost policy pays $6,000, while an actual cash value policy pays $3,000 on a 10-year-old roof and nothing on a 20-year-old roof.

Homeowners insurance produces a steady stream of class actions. Common theories include insurers depreciating labor costs (not just materials) when calculating actual cash value, using flawed estimating software to lowball repairs, and delaying or denying hail and wind claims in bulk. Individual policyholders also sue over bad-faith denials. The same valuation fights appear in auto claims, which our page on total loss car payout lawsuits covers.

If you think your claim was underpaid, keep the adjuster's estimate, your policy's declarations page, and your own contractor quotes. Product defect settlements can also matter here, since a failed roof or HVAC part may be covered by a manufacturer settlement rather than insurance. See the CertainTeed Horizon shingles settlement as an example.