For homeowners,
insurance protection is an important
aspect of homeownership. Buying
homeowners insurance, sometimes also
called home insurance, means buying
protection for your home - both inside
and out.
WHAT IS HOME
INSURANCE?
Home insurance
compensates you for losses to your home
and possessions inside it, so purchasing
a homeowners policy provides added
security for your investment. Home
insurance also protects you if you're
legally liable for someone's injuries on
your property, as well as from financial
losses caused by storms, fire, theft and
other events outlined in your policy.
Different
companies offer different home
coverages, so choosing the right policy
means finding the right mix of coverages
to meet your needs. This is what
we try to do for you as independent
agents.
Generally, a
standard homeowners policy protects the
following:
- •
the physical structure of your home
- •
structures on your property (storage
sheds, pools, boathouses, etc.)
- •
your personal property and belonging
inside your home, up to specified
limits
- •
your liability or legal
responsibility for any injuries and
property damage you or your family
members cause to other people
- •
injures to your household pets while
inside your home
- •
additional living expenses if a fire
or other insured disaster leaves you
temporarily unable to live in your
home.
Often, for an
additional fee, you can select optional
homeowners insurance coverages,
including:
- •
higher limits of liability for
property damage or bodily injury
- •
replacement cost for personal
property protection for
valuables (jewelry, watches,
fur, etc.)
- •
Additional coverage for
electronics or computer
equipment
To make shopping
for the right homeowners policy easier,
take an inventory of what you own to
decide what level of coverage makes you
comfortable.
What About
Townhouses?
If you own a
townhouse, you can insure it with a home
insurance policy or an association
master policy, depending on your
situation. Some townhouse
associations have master policies, in
which case you should purchase a tenant
homeowners policy to insure your
personal property. Other townhouse
associations do not have master
policies, which is when you should
purchase a home insurance policy for
your unit. Check with your
association to determine which type of
policy you should purchase for your
townhouse.
TYPES OF HOME
INSURANCE POLICIES
Homeowners can
purchase three different types of home
insurance policies:
-
HO1 - protecting property
and 11 basic perils
-
HO2 - protecting property
and 18 perils (including the
11 of an HO1)
-
HO3 - Protects against most
perils, including some not
covered by an HO2
|
Home Insurance
Policies and What
They Cover |
|
Types of Perils |
Covered Perils |
|
HO1 |
HO2 |
HO3 |
|
Fire or lightning |
x |
x |
x |
|
Loss of property on
premises due to fire
or other perils |
x |
x |
x |
|
Vehicles |
x |
x |
x |
|
Windstorm or hail |
x |
x |
x |
|
Smoke |
x |
x |
x |
|
Explosions |
x |
x |
x |
|
Theft |
x |
x |
x |
|
Vandalism and
malicious mischief |
x |
x |
x |
|
Riot or Civil
Commotion |
x |
x |
x |
|
Aircraft |
x |
x |
x |
|
Breakage of glass
constituting part of
the building |
x |
x |
x |
|
Collapse of
building(s) |
|
x |
x |
|
Weight of ice, snow
or sleet |
|
x |
x |
|
Freezing of
plumbing, heating
and air conditioning
systems and domestic
appliances |
|
|
|
|
Falling Objects |
|
x |
x |
|
Accidental
discharge, leakage
or overflow of water
or steam from within
a plumbing, heating
or air conditioning
system or domestic
appliance |
|
x |
x |
|
Sudden and
accidental tearing
apart, cracking,
burning or bulging
of a steam or hot
water heating system
or of appliances for
heating water
|
|
x |
x |
|
Sudden and
accidental damage
from artificially
generated currents
to electrical
appliances, devices,
fixtures and wiring |
|
x |
x |
|
All perils except
for flood,
earthquake, war,
nuclear accident
(check your policy
for a complete list
of perils |
|
|
x |
|
Coverage for
jewelry, art,
antiques, etc.
May also include
coverage for
building code
upgrades and sewer
backups. |
Can be added to any
policy for an
additional charge |
WHAT
HOME INSURANCE COVERS - AND WHAT IT
DOESN'T
What
it Covers
Standard home
insurance policies provide the following
types of coverage, up to the limits
outlined in the policies:
-
Dwelling - pays
for damage or
destruction to your
house and any unattached
structures and
buildings, such as
fences, detached
garages, and storage
sheds.
-
Personal Property
- covers the contents of
your house, including
furniture, clothing and
appliances, if they are
stolen, damaged or
destroyed.
-
Liability -
protects you against
financial loss if you
are sued and found
legally responsible for
someone else's injury or
property damage.
-
Medical Payments
- Covers medical bills
for people hurt on your
property. Medical
Payments coverage also
pays for some injuries
that may happen away
from your home, such as
if your dog bites
someone.
-
Loss of Use -
pays for additional
living expenses if your
home is too damaged to
live in during repairs.
Most standard home
insurance policies pay
10 to 20 percent of the
amount of your dwelling
coverage.
You can also
purchase the following optional home
insurance coverage:
-
Guaranteed
Replacement Cost
- Provides the most
complete coverage
for your home.
Your home insurance
company requires you
to meet specific
underwriting rules
and conditions to
qualify for this
coverage. For
instance, you may
need to increase
your home insurance
amount on a monthly,
quarterly or even
yearly basis to keep
up with the
inflation rate.
-
Inflation Guard
Endorsement -
automatically
adjusts your home
insurance limits
during your policy
period so they are
at 80 percent or
more of your home's
replacement cost,
which is the amount
most home insurance
companies require
you to carry.
This coverage is
beneficial if your
home's replacement
cost is increasing
with inflation.
-
Scheduled
Personal Property
Endorsement -
also called a
Personal Article
Floater. With
this coverage
possessions,
including jewelry,
furs, stamps, coins,
guns, computers,
antiques, etc., are
covered. Each
article is itemized
and detailed in the
floater, and
excluded perils are
also outlined,
Personal article
floaters often do
not have
deductibles.
-
Increased Limits
on Money and
Securities -
increases coverage
amounts for money,
bank notes,
securities, deeds
and more.
-
Secondary
Residence Premises
Endorsement -
Covers a secondary
residence, such as a
summer home.
Insurance for
secondary homes is
not automatically
provided by the home
insurance policy for
your primary
residence, so it's
important to
consider this
endorsement if you
own more than one
home.
-
Watercraft
Endorsement -
expands personal
liability and
medical payments
coverage for small
sailboats and
outboard motor boats
only.
-
Theft Coverage
Protection
Endorsement - if
items from your
motor vehicle ,
trailer or
watercraft are
stolen, theft
coverage protection
broadens theft
coverage without
requiring proof of
forcible entry.
-
Credit Card
Forgery and
Depositors Forgery
Coverage Endorsement
- coverage applies
if your credit cards
are lost, stolen or
used without
permission, or if
someone forges a
check, draft,
promissory note,
etc. Certain
restrictions apply
and are noted in
your home insurance
policy.
What
Home Insurance Doesn't Cover
A standard
homeowners policy may not protect you
from:
-
Flood,
Earthquake,
Nuclear Accident
and War - to
protect against
unforeseen and
uncontrollable
events like
these, you can
purchase hazard
insurance
through your
home insurance
policy.
-
Windstorm
Damage - in
certain areas
(mostly costal)
of some states,
standard home
insurance
policies do not
cover damage
caused by
windstorms and
hail.
Check your
policy
information to
see if windstorm
damage is
covered in your
area.
Questions to Ask Before You Buy Home
Insurance
Is flood insurance
required, and what kind of flood
insurance is available?
If you live in a
flood plain and you have a mortgage, you
may be required to have flood insurance.
Depending on where your home is located,
you may qualify for flood insurance
through the National Flood Insurance
Program. Some insurance companies
also offer flood insurance. Keep
in mind that your home could sustain
flood damage by other means, such as
broken pipes, even if it's not located
in a flood plain, so consider this
coverage if you are eligible for it.
Is Earthquake
insurance available?
Most insurance
companies offer earthquake insurance for
an additional cost. This insurance
generally is attached to your home
insurance policy as an endorsement.
HOW
MUCH HOME INSURANCE DO YOU NEED?
You generally have
three options to choose from when
deciding how much home insurance you
need, and each of these options provides
a different level of coverage for your
home:
Actual Cash
Value - pays for the cost to replace
damaged property while factoring in
depreciation amounts. For home
insurance policies, ACV applies unless a
policy states that Replacement Cost or
Guaranteed Replacement Cost has been
chosen.
Replacement
Cost - pays for the cost to replace
damaged property without factoring in
deductions for depreciation, but payment
is limited to a maximum dollar amount.
Guaranteed
Replacement Cost - pays the full
cost of replacing damaged property, with
no deduction for depreciation and no
dollar limit. Guaranteed
Replacement Cost is not available in all
states, and most companies limit the
coverage to 120 percent of the cost to
rebuild your home. Allowing for
this amount protects you in cases of
increased construction costs or other
building-related fees due to inflation.
You can determine
a rough estimate of what it would cost
to rebuild your home by following this
equation:
Local building
costs per square foot X Total square
footage of your home = Cost to rebuild
your home.
FREQUENTLY ASKED QUESTIONS ABOUT HOME
INSURANCE?
What factors
can affect home insurance premiums?
The following
factors can affect your premium:
Home features &
Characteristics - your home's age,
type of structure, wiring, roof, garage,
etc., can affect your home premium.
Older homes often cost more to insure
and those costs can differ depending on
whether your home is brick, frame, stone
or has synthetic siding.
Location -
where your home is located can change
your home insurance premium. For
instance, your home insurance rate can
be affected if your home is in close
proximity to a fire station; is exposed
to extreme weather, such as hurricanes,
tornadoes or earthquakes; or is in a
neighborhood more prone to theft.
Protective
Devices - burglar alarm systems,
smoke detectors, fire extinguishers,
sprinkler systems, and deadbolt locks
can lower your home insurance premium.
Personal
Factors - what you do can affect
your home insurance premium, too.
For instance, smokers may pay more for
home insurance than nonsmokers. A
good credit history can also lower what
you pay for home insurance.
Claims History
- if you have a history of claims on
your home policy, you may pay a higher
premium
Am I
required to have home insurance if I own
a home?
Unlike driving a
car, you can legally own a home without
home insurance. However, if you
finance your home with a mortgage, your
lender most likely will require you to
have home insurance coverage to protect
your home in case of damage caused by
unforeseen circumstances, such as fire
or natural disasters.
If you live in an
area that is prone to flooding or
earthquakes, your lender may also
require you to purchase flood or
earthquake coverage.
If you purchase a
condominium or co-op, your board may
require you to buy condominium insurance
or home insurance. Be sure to
check with your board to see what type
of policy is required.
After you pay off
your mortgage, you aren't required to
have home insurance. However, you
should keep your home insurance policy
active to avoid risking what you've
invested in your home.
Why should I
complete a home inventory?
When you purchase
a home and a home policy, you should
create an up-to-date-home inventory to
expedite a claim settlement if you ever
need to make one. With a complete
home inventory, your insurance company
can verify property easier, which makes
settling your claim easier. Plus,
you can easily verify losses for your
income tax return with an updated home
inventory.
How do I
complete a home inventory?
Start your home
inventory by making a list of your
possessions, describing each item, and
noting the make and model and where each
item was purchased. Include sales
receipts, purchase contracts and
appraisals if you have them, too.
Organize clothing into categories for
easier reference.
A few home
inventory organization tips:
-
•
Remember to
list
big-ticket
items like
jewelry,
artwork and
collectibles
-
• Take
pictures of
room and
important
individual
items
-
•
Videotape
your home by
walking
through it
and
describing
the contents
throughout
the house.
-
• Save
an inventory
list on your
personal
computer and
store it on
a separate
disk or
drive
-
• Put
all of your
photos,
lists and
videotape
documentation
in a safe
deposit box
What's the
difference between cancelling and
non-renewing a home insurance policy?
Cancelling an home
policy and choosing not to renew it are
two very different actions an insurance
company can take. Typically
insurance companies only cancel an
active policy if one or all of the
following occurred:
-
•
the
policy
has been
in force
less
than 60
days
-
•
you fail
to pay
the
premium
-
•
you
commit
fraud or
made
serious
misrepresentations
on the
application
Non-renewing a
policy is a decision that you or your
insurance company can make to
discontinue coverage at the end of a
policy term. Depending on your
state, if your insurance company chooses
to non-renew your policy at the end of
the policy term, they most notify you
and provide an explanation within a
specified time period. You can
contact your company's consumer affair's
division if you disagree with the reason
or want further explanation.
What parts
make up a home insurance policy?
Although policies
differ in their actual structure, most
contain the same basic components:
Declarations
Page - usually the first page of
your policy, it typically contains
summary information such as name and
address of the insured, dollar amounts
of the coverage in the policy,
description of the insured property,
name of the company insuring the risk,
and contact information.
Definitions
- explain the meaning of the terms used
in the policy.
Coverage -
details the extent of protection for
both property (house, structures,
contents) and liability (bodily injury
or property damage to others for which
you are liable) in your home insurance
policy.
Exclusions
- explanation of what is not covered by
your home insurance policy, under both
property and liability coverage.
Conditions
- outline the responsibilities of both
the insured and insurance company under
the policy. Your duties in the
event of a loss and also the procedures
the company will follow to settle any
losses are detailed here.
Endorsements
- riders, amendments, or attachments
that alter the standard coverage
provided by the policy. Many
endorsements carry an additional charge
for them.
