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Homeowners Insurance Explained

Independent agent at Storm Insurance Jackie Everson answers the common questions she receives about homeowners insurance.

Jackie Everson

Independent Agent at Storm Insurance Services in Farmington

WHAT IS “ORDINANCE OR LAW” COVERAGE? The policy agreement between an insurance company and the homeowner is that the company will rebuild the home as it stood just before the accident up to the limit of coverage on the policy, but if your home was built prior to the most current building codes, then the municipality permitting and approving the rebuild will require the home to meet current standards. Ordinance or Law is the coverage that fills the gap between what your policy contract allows and what your municipality requires and is almost always a 10-20% limit of the dwelling coverage.

DOES HOMEOWNERS INSURANCE COVER WATER DAMAGE? Water is a funny thing when it comes to insurance because the cause of the water damage must be sudden and accidental, which means a leak through the roof or basement wall that’s been going on for an extended period as a maintenance issue, not an insurance issue. The purpose of insurance is to cover sudden losses that you couldn’t possibly recover from financially without it; it does not replace the repairs and upkeep necessary to maintain a home.  

HOW IS HOME REPLACEMENT COST DETERMINED? This can be a hard concept to understand because the value of a home is not a factor in determining the replacement cost of the home. And it’s the replacement cost that determines the required limit of coverage for the dwelling. Most insurance companies use a third-party software to calculate the replacement cost of a home and err on the side of caution when it comes to calculating these replacement estimates, taking into consideration the worst case scenarios. 

Everson emphasized that everyone should be checking with their agent to make sure their limits of coverage in each area are sufficient to cover their situation. To learn more, visit