But Really, What Does Homeowners Insurance Cover? Your Top Questions Answered

If the closing date on your new Brooklyn home is drawing near, you may have a few questions about insurance. One of the most common we hear is, “What does homeowners insurance cover?”

Homeowners’ insurance can be confusing and mistakes aren’t unheard of. Unknowingly, many individuals insure only their mortgage (typically 90% of their home’s value). With the average cost of a home in Brooklyn being just over $650,000, that’s a large margin left unaccounted for. 

Let’s take a look at what homeowners insurance really is, if it’s required, what it covers, and how to make sure you have adequate coverage.

What is Homeowners Insurance? 

Homeowners insurance is insurance coverage for the exterior and interior of your home. Your home’s possessions are included in the coverage as well. 

It offers protection against fire, internal water damage, lightning strikes, and hail. Additionally, homeowners insurance can provide peace of mind for theft and loss. It even provides liability coverage if someone gets hurt on or by your property.  

How Does Homeowners Insurance Work?

Homeowners insurance provides financial compensation for covered perils. While the specific process varies by provider, here’s a basic breakdown of how homeowners insurance works.

Should a storm destroy a home’s siding, the family dog bite the neighbor’s child, or any other example of a covered event take place, an insurance claim needs to be submitted by the affected homeowner. As much information as possible should be gathered and provided to the insurance company.

If a homeowner needs to report a loss, theft, or vandalism, a police report must be filed and then submitted to the insurance company, along with a list of the missing or damaged items. 

Insurance companies might ask for photo or video proof of the damage described in a claim. They may also send an insurance claims adjuster to investigate larger incidences. Once a claim has been approved, payment is submitted to the homeowner.

What Does Homeowners Insurance Cover?

Homeowners’ insurance policies vary by provider, but most will provide coverage for the following scenarios.


Homeowners’ insurance typically covers fire damage. In 2018, Brooklyn had over 8,000 structural fires. To make claims for fire damage, insurance companies will typically send an adjuster to assess the damage and evaluate the cost of fixing or replacing the damaged structure and items. They will also request any documentation provided by the fire department or arson investigator. It is important to keep receipts of any immediate items that were needed to prevent further damage or if you are forced to relocate while the structure is being replaced. 


In 2020, there were over 15,000 burglaries reported in Brooklyn. Homeowners insurance offers reimbursement for stolen personal items. To file a theft claim, individuals must file a police report and provide an itemized list of the things stolen from the home or individual. Incidents aren’t limited to your physical address either. If you ride your bike to the local coffee shop and it’s stolen while you’re waiting for your mocha, you can still submit a claim.


Liability coverage under your homeowners’ insurance covers injuries sustained while on your property or by your property. For example, if your dog bites your neighbor’s child and you are sued to cover medical costs, homeowners insurance can cover some or even all of those costs and any associated lawyer fees. While injuries from accidental falls or death from accidents on your property are covered, intentional attempt to harm another individual is not covered.

Is Homeowners Insurance Legally Required?

While homeowner’s insurance isn’t legally required in the state of New York, many mortgage brokers require a policy to be in place before agreeing to a loan. This is to ensure that their investment in the property is protected. 

Even if your home is owned outright, homeowners insurance is still beneficial. It does more than just provide coverage for your physical home. It also covers personal liability costs and possessions. Many homeowners also appreciate coverage for additional living expenses should a home be uninhabitable while undergoing repairs from an insurance-covered incident. For these reasons, it’s always important to purchase a policy worth more than just the cost of your home. 

Understanding Actual Cash Value vs. Replacement Cost 

As you’re researching what homeowners insurance covers, you may have noticed that policies offer reimbursement as either Actual Cash Value or Replacement Cost. 

When a homeowners insurance policy is written for Actual Cash Value, reimbursement is capped at the current value of an item. This means that for items that depreciate in value (almost all), you won’t be receiving what you paid for the item, but it’s current market value. 

Replacement Value, however, reimburses at the current new price of the item that has been damaged or stolen. This is why policies with Replacement Value coverage are typically more expensive. 

Think of it this way. If your five-year-old computer is stolen from your home and your homeowners’ insurance policy offers Actual Cash Value protection, you may only receive a few hundred dollars for your claim. This leaves you with having to make up the difference for a new model or buy a used product. But if your policy is written with Replacement Value coverage, you can bring home a new laptop without dipping into your own bank account.

If you have many high-value items in your home, you can make an itemized list for the insurance company so they adjust your coverage to accommodate those expensive items. Additionally, insurance companies can add riders or additional policies to cover things like sewer and drain backup and tropical storm/hurricane damage, which might not be a bad idea to have in Brooklyn. When it comes to finding the right coverage for you, it’s not just about answering the question, “What does homeowners insurance cover?” Your goal is to make sure that your policy matches your unique coverage needs.

How Do I Get Homeowners Insurance in Brooklyn?

At Lincoln Brokerage, we’ve helped countless Brooklyn homeowners secure coverage for their homes and possessions. If you’re a first-time homebuyer or simply looking for a new insurance provider, we would love the opportunity to match you with a policy that fits your needs and budget. Reach out for your custom quote today.

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