THE BASICS OF HOMEOWNERS INSURANCE

INSURING YOUR HOME

SPECIFIC COVERAGE

INSURING PERSONAL PROPERTY

No two homes are exactly alike. Buying a policy “off the shelf” without a plan can result in a difference between what you need and what you’re paying for. Your homeowner’s policy should reflect the uniqueness of your home and your lifestyle. Whether you own a house, a condominium or rent an apartment, for most people their home is their most important investment. As a leader of quality protection we have developed one of the most outstanding reputations of offering the highest rated homeowners insurance plans in America today. We believe that an insurance company should do more than pay for financial losses incurred in the home: it should help prevent losses and accidents, and offer policies flexible enough to meet your individual needs. Above all, provide you with the security that comes only from the knowledge that your home is safe.

For this reason the companies we represent continue to receive the highest ratings from the insurance industry’s leading analysts and rating authorities.

We can offer you:

· Many coverage to protect both you and your property.

· Responsive and caring claims service.

· Property insurance at an affordable price.

What is it?

As the name suggests, homeowners insurance protect you if your home is damaged or destroyed. In addition, it covers your family’s possessions and can provide you with compensation for liability claims, medical expenses, and other amounts that result from property damage and personal injury suffered by others. By paying insurance premiums, and satisfying the other requirements of your insurance company, you can protect yourself in the event of loss due to unforeseen and/or catastrophic events. You still won’t be able to predict when lightning will strike your house, but you will sleep better at night knowing that homeowners insurance can save you from financial ruin if such an event happens.

Why do you need it?

You may need homeowner’s insurance because your mortgage lender requires it. But, even if you own your home outright, you still need homeowners insurance to protect that which you can’t afford to loose. It is really that simple. You spend years building up a solid financial foundation for you and your family. All that hard work can go down the drain in a matter of minutes when, for example, a tornado devastates your house, a burglar robs and vandalizes your home while you’re gone, your dog bites and severely injures a neighborhood child. There are practically thousands of possible scenarios that could result in severe financial loss or even the loss of your home.

What do you need to know?

Homeowners insurance protects more than just the owner of the house. Generally, it protects anyone named on the policy, your spouse, residents of the home (other than renters), household employees, guests and visitors.

The property insurance section of your homeowners policy protects more than just your actual home or dwelling. In most cases, the insurance company should reimburse you for damage or theft affecting your dwelling, any structures attached to the dwelling, structures on your premises that are not attached to the dwelling, personal property, loss of use of your dwelling, and liability if you or another insured are found responsible for personal injury or property damage to another.

There is a wide variety of damages, condition, and costs that are not covered by standard homeowners insurance. Here are just a few examples:

· The land underneath your home is damaged

· Your claim exceeds your maximum stated coverage amount

· You have flood damage

· Your liability results from injuries suffered by a tenant

· You have losses related to business activities in your home

· Your claim is covered by other pre-existing insurance

· Or your claim was caused by someone else who is insured under your party

To cover yourself against losses such as these, your homeowners policy can be amended by adding endorsements to your policy. While other coverage, such as flood insurance, has to be purchased under a separate insurance program. Still other coverage can be obtained by purchasing a policy that covers a broader list of perils. The cost of homeowner’s insurance will depend upon the amount of your coverage, any endorsements you add to the policy, and the deductibles you choose.

How do I get it?

Homeowners insurance policies are written individually, typically at the time you purchase the home or at the time you take out a mortgage on the home. Yet this doesn’t mean you’re not free to change insurance companies or policies when ever you want to. You can contact us any time you wish to discuss homeowner’s insurance for information, additional coverages and quotes.

top of page

What is Homeowners Insurance?

Homeowners insurance is a policy covering your home (the structure) and its contents (personal belongings). It can save you from severe financial loss if your home is damaged or destroyed. It covers your family’s possessions and can provide you with compensation for liability claims, medical expenses, and other amounts that result from property damage and personal injury suffered by others. Most lenders require homeowners insurance in order to obtain a mortgage.

For example, a homeowners insurance policy can protect you against the following scenarios:

· A tornado or storm shattering your home’s windows or scattering your roofing shingles across the neighborhood

· A burglar breaking into your home and stealing that figurine you inherited from your grandmother

· Your dog biting a neighbor of delivery person

· Phyiscal therapy cost for a guest injured by a fall in your home

· A successful personal injury lawsuit brought by a neighbor the last time you practiced your ship shot in the backyard

· Damage from a vehicle crashing into your home

Homeowners insurance is also a way for condominium and cooperative unit owners, mobile home owners, and renters to protect their possessions from damage or theft, and to obtain liability coverage for property damage and personal injury suffered by others.

Who is Covered?

Homeowners insurance protects more than just the owner of the house, condominium, or other property. Depending on your living situation, the following individuals are covered under your homeowners policy.

* Named Insured

The insurance policy identifies the “Named Insured” (meaning the individual who is primarily insured under the policy), who is usually the same person named on a deed or lease as the owner or tenant, respectively. You, as the named insured, receive the most extensive coverage under your homeowners policy, for you are covered by property insurance on your dwelling and other structures, in addition to personal property and liability insurance. Named insured condominium owners and renters do not receive such extensive coverage because they do not, on an individual basis, own their dwelling or other structures.

* Spouse

If your spouse resides in your dwelling, then he or she is covered by personal property and liability insurance, even if he/she isn’t identified on the Declarations Page as a named insured.

* Residents

Individuals who reside in your dwelling are covered by personal property and liability insurance if they are your relatives (e.g., your children) or if they are under 21 years of age and in the care of any member of your family.

* Employees

Housekeepers, au pairs, or gardeners, for example, are covered by personal property insurance.

* Guests and other visitors

Your guests and other invited visitors can typically be covered by personal property insurance so long as you contact the insurance company or your agent to request coverage.

What is covered?

The property insurance section of your homeowners policy protects more than just your actual home or dwelling. In most cases, your insurance company will reimburse you for damage or theft affecting:

* Your dwelling, any structures attached to the dwelling, and building materials and supplies that are stored near the dwelling and are used to construct, alter, or repair the dwelling or other structures on your property. * Structures on your premises that are not attached to the dwelling, such as a tool shed or detached garage * Personal property such as the contents of your house like furniture, clothing, and stereo equipment, as well as outdoor items like sporting equipment and gardening tools

Generally, the coverage limit for other structures and personal property coverage is a set percentage of the dwelling coverage amount. If you wish, you can increase a policy’s preset coverage amount by endorsement (see below).

Condominium or cooperative unit coverage

If you own a condominium or cooperative unit, your homeowners insurance does not cover you for your entire dwelling space because you do not individually own the structure you live in. Instead, you are covered for your personal property and any portion of the unit you own under the terms of the condominium or cooperative documents. Renters are covered for personal property only because renters do not own any portion of the property.

top of page

In most cases, whether you own or rent a home, the homeowners insurance company will reimburse you for costs, expenses, and other amounts related to:

· Loss of use

If your dwelling is not fit to live in because of damage covered by the policy, you should receive reimbursement for your family’s or household’s living expenses while you wait to permanently relocate or wait for the dwelling to be repaired. A set coverage limit is always applied to a policy’s standard loss-of-use coverage, but it can be increased by endorsement.

· Liability

If you or another insured are found responsible for personal injury or property damage suffered by another person, your insurance company will offer a settlement amount owed to that person. This is only true if carelessness or negligence, rather than intentional misconduct, caused the injury or damage. If an injured or damaged person brings a lawsuit, your insurance company should pay to defend you or any other insured named in the lawsuit. For example, you may be found negligent if a meter reader was injured by falling off your tricky cellar stairs because the railing was broken (and you knew about the situation but failed to repair it). You may be found liable for intentional misconduct if you cut down a tree on your neighbor’s property to improve your view.

· Medical Payments to others

If a nonresident requires medical assistance as a result of an injury suffered on or near your premises, your insurance company should pay his or her medical expenses. Injuries that take place away from your premises are also covered, as long as you, another insured, a household employee, or your pet caused the injury.

Open perils vs named perils

Your policy can also cover either open perils or named perils. A named perils policy specifies which perils are covered as well as which perils are not. Rather than covering a number of listed or named perils, an open perils policy covers you broadly against risk or direct loss to your dwelling and other structures, and also includes an extensive list of perils which are not covered.

What is not covered?

There is a wide variety of damages, conditions, and costs that are not covered by homeowners insurance. Your insurance policy describes a number of situations that are specifically excepted or excluded from coverage (called exclusions). Some policies contain more exclusions than others. Your policy also describes certain conditions you must meet, and duties you must perform, in order for you to be covered. Terms and limitations that were originally included in your policy can be changed by a document called an “endorsement.” For these reasons, you should carefully read your homeowners policy to learn the limitations and exclusions that apply to your specific situation. Here are just a few examples of situations when you may not be covered by a standard homeowners insurance policy.

· Land

Although the structures and possessions that lie upon a parcel of land are usually covered by a homeowners policy, the land itself is not. This means, for example, you’re not covered by your policy if your neighbor’s pool overflows and contaminates your untilled garden.

· Coverage Limitations

The Declarations Page of your policy recites maximum coverage amounts that limit what the insurance company must pay. Separate limits are set for the dwelling, other structures, personal property, loss of use, personal liability, and medical payments to others. This means that even if you suffer a loss to your personal property in the amount of, let’s say $50,000, the insurance company will pay you no more than the policy’s stated limitation recited on the Declarations Page. If this figure within your policy is $100,000 then you’re covered for all of it. On the other hand, if it’s only $30,000 then you’ll have a $20,000 deficit.

· Flooding

Your homeowners policy will not cover you for damage that results from floods, waves sewer overflows, or water seeping into you basement.

· Business

If your involved in a business activity, your homeowners policy will not cover you for liability or medical payments due other persons, even if the damage or injury occurred in your home. Other structures located on your premises that are used for business purposes are also not covered by the policy. This means your standard homeowners policy will not reimburse you for medical care required by a client who slips and falls in your home office as he’s putting his coat on the rack.

· Your tenants

Your standard homeowners policy will not cover you for damages or injuries suffered by the tenants who rent any part of your home.

· Other insurance

If an injury or damage is covered by other insurance in addition to your homeowners policy, your homeowners insurance company will only pay its proportionate share of the amount due.

· Theft by another insured

Your homeowners insurance will not cover you for a loss caused by a theft committed by another insured person under the policy. This means your policy will not cover you if your nephew (who lives with you) steals a valuable baseball card from the family room.

· One or two family dwellings

Structures that have more than two family dwelling units cannot be covered by homeowners insurance.

· Cars

Registered motor vehicles are specifically excluded from personal property coverage. Only vehicles like motorized wheelchairs and lawn mowers, which are not usually registered with the state, are covered by personal property insurance. Your car is also not covered under the “Personal Liability and Medical Payments to Others” sections of your homeowners policy because insurance companies prefer you to insure vehicles with an automobile insurance policy.

How much coverage is needed? Your home can be insured for either:

· Replacement Cost—pays the full cost of replacing damaged property, with no deduction for depreciation but with a maximum dollar amount.

· Guaranteed Replacement Costs—pays the full cost of replacing damaged property, with no deduction for depreciation and no dollar limit. This coverage is not available in all states. Some insurance companies may limit coverage to 120 percent of the cost of rebuilding your home.

· Actual Cash Value—pays you an amount equal to the replacement value of damaged property minus a depreciation allowance.

Unless a policy specifically states that property is covered for its replacement value, coverage is for actual cash value.

It is important that your policy should cover 100% of the replacement cost of your home. That way, the insurance company will pay you the full replacement cost for any damage up to the coverage limit. If you fear inflation will decrease the value of your policy, an inflation guard endorsement, which is built-in to many homeowners policies these days, ensures that you coverage amount increases a bit every year to keep up with inflation. What this means, for example, is if your house increases in value next year by 5% your policy’s replacement limit will also increase, according to some predetermined index of local home values.

Additions to your home

If you add improvements to your home, you should increase your coverage. Don’t wait until the addition is completed to increase your coverage, contact your insurance agent or representative shortly before or after construction begins. Otherwise, if the new addition is damaged or destroyed before you have increased your coverage, you may be responsible for the cost of repairing or rebuilding the addition.

Also, make sure that contractors wand subcontractors working on your addition have workers compensation by requesting copies of their insurance certificates. If the coverage is insufficient you may need to extend the liability limits portion of your homeowners policy, or simply find a company whose insurance meets your requirements. The reason for this is relatively simple to understand…Workers injured while working on your addition could sue you if the contractor doesn’t have the proper insurance coverage.

top of page