Will your homeowners policy cover damage caused by your neighbor?

Having your own home is nice, but no one said it's easy. The upkeep of owning a home can be tiresome and costly, especially if you have neighbors in close proximity.

Homeowners insurance is a great way to protect your home against unforeseen tragedies. But what if the problem isn't caused by you? What if your neighbor unwittingly causes damage? Will your homeowners insurance policy cover the damage?

The simple answer: probably. Although every homeowners policy is different, many policies have a section or clause that covers your liability as a homeowner and as a neighbor. Let's take a look at some details.

If you cause damage to your neighbor's home

When it comes to your neighbor's property, your homeowners policy may include coverage for property damage to their home caused by you, your family members, or something on your property such as a fallen tree, says 360 Financial Literacy. This is similar to your own car insurance policy covering the costs of insurance with a rental car.

Before assuming anything or agreeing to pay your neighbor in case of damage, contact your insurance provider to get the details and read the fine print in your policy.

If your neighbor causes damage to your home

There are a few different ways you classify damage caused by someone else. For example, if your neighbor has a fire and it spreads to your home, is it your neighbor's responsibility to take care of the damage? Generally speaking, if it's caused by the natural elements, it's not your neighbor's fault, and therefore they aren't liable. You can usually claim no-fault damage on your own homeowners policy.

However, if the damage to your home or property is directly caused by a careless neighbor or their reckless behavior, that's a whole other story. According to RBC Insurance this is commonly referred to as liability insurance. It means if you cause damage to someone else's home or property you are covered. The same will be true for your neighbor if they have this type of insurance.

Why you should consider liability insurance

If you're going to buy homeowners insurance, it's a good idea to get liability insurance on top of the standard flood, water, fire damage, and theft coverage. It protects you from things you just can't predict, and can save you a lot of money out of pocket, not to mention save your relationship with your neighbor.

The moral of the story - and the reality of home ownership - is living in close proximity to others means learning to live with the accidental intrusions into each other's lives. If an accident happens, assess the damage and contact your provider to see if you (and your neighbor) have insurance that will cover the costs.