Buying a Home in Wisconsin? Homeowners Insurance Coverages Every Buyer Should Know!

Purchasing a home is an exciting milestone! Whether you're buying your first home, upgrading to a larger property, or relocating within Wisconsin, protecting your investment should be one of your top priorities.

One of the most important steps before closing is securing the right homeowners insurance policy. But homeowners insurance is more than just coverage for the physical house. A well-designed policy can also protect your belongings, provide liability protection, and help pay for temporary living arrangements if your home becomes uninhabitable after a covered loss.

At Tilley Insurance Agency, we believe understanding your coverage is just as important as finding a competitive price. Here's a breakdown of common homeowners insurance coverages and optional protections Wisconsin homebuyers should consider.

What Does a Standard Homeowners Insurance Policy Cover?

Most homeowners policies include several important areas of protection:

1. Dwelling Coverage

Dwelling coverage protects the physical structure of your home, including the roof, walls, floors, and attached garage.

This coverage should be based on the estimated cost to rebuild your home—not necessarily what you paid for it or its current market value. Land value, location, and real estate market conditions can make the purchase price very different from the cost to reconstruct the home.

When determining the appropriate limit, factors such as square footage, construction materials, custom features, and recent renovations should be considered.

2. Other Structures Coverage

Do you have a detached garage, shed, fence, gazebo, or other structure on your property?

Other structures coverage can help protect buildings and structures that are not attached to your home, subject to your policy's terms and limits.

If you have multiple outbuildings or expensive improvements, it's worth reviewing whether the standard coverage limit is sufficient.

3. Personal Property Coverage

Your home isn't just the building—it's everything inside it!

Personal property coverage helps protect belongings such as:

• Furniture and appliances

• Clothing and shoes

• Electronics and televisions

• Kitchenware and household items

• Sports equipment and other personal belongings

One important consideration is whether your belongings are insured at actual cash value or replacement cost.

• Actual Cash Value (ACV): Accounts for depreciation when determining the value of damaged or stolen belongings.

• Replacement Cost: Generally pays what it costs to replace covered belongings with comparable new items, subject to policy terms and limits.

Replacement cost coverage is often worth considering because it can make a significant difference when replacing your belongings after a loss.

4. Personal Liability Coverage

Liability coverage can help protect you financially if you are found legally responsible for bodily injury or property damage to someone else.

For example:

• A guest slips on your icy driveway and gets injured.

• Your dog bites a visitor.

• Someone is injured because of an unsafe condition on your property.

Liability coverage can help pay covered legal expenses, settlements, or judgments, up to your policy limit.

Homebuyers should review their liability limits and consider whether additional protection, such as a personal umbrella policy, makes sense.

5. Medical Payments to Others

Medical payments coverage can help pay for certain medical expenses when a guest is accidentally injured on your property, regardless of fault.

For example, if a visitor trips on your front steps and needs medical attention, this coverage may help with eligible medical expenses.

This is separate from personal liability coverage and generally has a smaller limit.

6. Loss of Use / Additional Living Expenses

Imagine a fire causes significant damage to your home, making it unsafe to live in while repairs are completed.

Where would you stay?

Loss of use coverage, also called additional living expenses, can help pay for certain additional costs of living elsewhere while your home is being repaired after a covered loss. Depending on your policy, this may include temporary lodging, increased food expenses, and other necessary costs.

Optional Coverages Wisconsin Homeowners Should Consider

A standard homeowners policy provides important protection, but it does not cover every possible situation. Depending on the property and your needs, additional coverage may be available.

Sewer Backup and Sump Pump Overflow

This is an important coverage to discuss with your insurance agent, especially if your home has a basement.

Wisconsin homeowners can experience heavy rainfall, snowmelt, and changing ground conditions that put pressure on drainage systems.

Sewer backup and sump pump overflow coverage can help protect against certain losses when water or sewage backs up into your home or a sump pump overflows.

Important: This coverage is generally not automatically included in a standard homeowners policy. It is typically added through an endorsement, and limits and exclusions vary by carrier.

Flood Insurance

Many homeowners are surprised to learn that standard homeowners insurance generally does not cover flood damage.

Flooding may result from overflowing rivers, heavy rainfall, or water accumulating on normally dry land. Even homes outside designated high-risk flood zones can experience flooding.

A separate flood insurance policy may be worth considering depending on your home's location, drainage, and exposure to water.

Ordinance or Law Coverage

If your home is older, this coverage is especially important to discuss.

Suppose a covered loss causes significant damage to your home, and local building codes require upgrades during reconstruction. Ordinance or law coverage can help with certain additional costs associated with bringing the repaired or rebuilt home up to current building requirements.

This can be particularly relevant for older Wisconsin homes that may have outdated electrical, plumbing, roofing, or other building components.

Service Line Coverage

The utility lines running from your home to the street may be your responsibility to repair if they become damaged.

Service line coverage can help pay for eligible repairs to certain underground utility lines, such as water, sewer, electrical, or other covered service lines.

A damaged underground line can be expensive to repair, so this is an additional coverage worth asking about.

Equipment Breakdown Coverage

Your home's major systems and appliances can be expensive to repair or replace.

Equipment breakdown coverage may help with certain sudden and accidental mechanical or electrical breakdowns involving covered equipment, such as:

• Heating and cooling systems

• Electrical panels

• Water heaters

• Major household appliances

This is different from a standard home warranty and is subject to the policy's coverage terms.

Scheduled Personal Property

Do you own expensive jewelry, watches, collectibles, artwork, firearms, or other valuable items?

Standard homeowners policies often have special limits on certain categories of belongings. If you own items that exceed those limits, scheduling them individually may provide broader protection.

An appraisal or proof of value may be required.

Don't Forget Your Deductible!

Your deductible is the amount you are responsible for paying toward a covered claim before insurance pays the remaining covered amount.

For example, if you have a $2,000 deductible and experience $10,000 in covered damage, you would generally be responsible for the first $2,000.

Some policies may also have separate deductibles for certain types of losses, such as wind or hail. Always review the deductible structure before selecting a policy.

What Should You Have Ready When Getting a Home Insurance Quote?

To help make the quoting process easier, have some basic information available:

• Property address

• Year the home was built

• Approximate square footage

• Roof age and material

• Type of foundation and basement

• Updates to plumbing, electrical, heating, and roofing

• Detached garages, sheds, or other structures

• Any special features, such as a pool, wood-burning stove, or finished basement

The more accurate the information, the easier it is to evaluate the home and determine appropriate coverage options.