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What does my homeowner insurance policy cover?
Basically, homeowner insurance covers your house, any adjacent structures (such as a garage) and your personal belongings. Homeowner insurance protects you from specific types of home-related accidents and incidents. The most common types are fire, theft and vandalism.
Homeowner coverage goes beyond your home and possessions, providing for additional living expenses, such as hotel expenses, if you are temporarily unable to use your house due to an accident. The policy also provides liability protection. If you or a member of your household is responsible for injuring someone or damaging someone's possessions, your policy covers it.
When purchasing homeowner insurance, remember that you select the amount of coverage you will need to replace your home and property, and an amount to cover any liabilities. Also note that most standard policies do not cover flood damage. Especially if you live in a high-risk area, you should purchase flood insurance separately.
Is the present amount of dwelling coverage on my homeowner policy sufficient?
If your policy¹s value is large enough for you to rebuild your house if a total loss occurred, then you are properly insured. You should review your insurance periodically to make sure you are adequately covered because the replacement cost of your home will change over time.
May I increase or decrease the amount of insurance on personal items in my home?
Yes. Initially, your personal property coverage usually reflects 50 percent of your home coverage. It may be increased or decreased, depending upon state requirements.
Are there any items in my home not covered by my homeowner policy?
Most items are covered for loss or damage and are subject to limits. For example, if jewelry was stolen from your home, you may be reimbursed up to a certain limit, perhaps $1,000. Some items may not be covered unless they are specifically insured, or "scheduled." It is wise to itemize valuables to be sure that your personal property is properly insured.
If my home is damaged from a covered peril and I cannot live in it until repairs are made, will my insurance policy cover my living expenses?
Yes. Homeowner coverage allows for Additional Living Expenses. The amount of coverage is generally 20 percent of the amount of coverage on your home. If you have $100,000 coverage, you may have as much as $20,000 for additional living expenses.
If my home or personal property is water damaged because a pipe burst in my home, what is covered under the homeowner policy?
You are covered up to your policy limits to repair or replace items damaged to your home and personal property, and for any additional damage caused while the faulty system is being repaired. For example, you are covered for the expense of tearing out the wall or ceiling to replace a broken pipe. You are not, however, covered for the cost to replace the pipe. You are not covered for the cost to repair or replace the system, unless the water damage was caused by freezing. In order for water damage to be covered, it must be sudden and accidental. Damage resulting from a slow leak over a period of time would not be covered.
If my plumbing or heating system freezes and my home is damaged as a result, what coverage do I have?
You are covered for resulting damage to your home or personal property as well as for damage to the plumbing or heating system itself. If your home is vacant or unoccupied at the time the freeze occurs, you are covered as long as you have taken the necessary precautions to keep the building heated or had the water turned off and the plumbing and heating systems drained.
If my pets cause damage to my personal belongings,
what coverage do I have?
There is no coverage on the homeowner policy for loss or damage to personal belongings caused by a pet or other domestic animal.
Is there any limit on the insurance for my silverware?
In most states, there is a limit of $2,500. If you need more coverage, you should consider "scheduling" the silverware.
If my home suffers damage from vandalism, do I have coverage?
You have coverage up to the limits of your policy, unless your house was vacant for 30 or more consecutive days immediately preceding the incident.
If a visitor is injured on my property, what protection do I have?
If you are legally liable for the injury, you are covered up to your policy limits under the liability portion of your homeowner policy. Usually, the insurance company will also pay for medical expenses for your visitor, up to specified limits. Exclusions and limitations vary depending upon the state in which you live.
If I conduct business at home, is my business property covered by my homeowner policy?
There is coverage up to $2,500 for property on the "residence premises" that is used at any time or in any manner for a "business" purpose.
Does my policy cover debris removal?
Yes, in the case of a covered loss, your homeowner policy covers the expense to remove debris, such as shingles that blew off your roof.
How can I insure special items?
You can schedule the item in your homeowner policy. This means you specifically describe and insure these items. You will pay additional premium, depending upon the amount you wish to insure such items for. Most people schedule jewelry, furs, art, silver, antiques, coin and stamp collections and photographic equipment.
Does my homeowner policy provide protection against liability for my recreational motor vehicles?
In most cases, you have liability protection on recreational vehicles such as a snowmobile as long as any bodily injury or property damage occurs on the insured's premises.
Do homeowner insurance premium plans cost more?
Usually, yes. Like any installment plan, insurance premium payment plans may include interest or fees. You should ask your insurance representative how much the interest or fees add up to.
Can my insurance company ask me for more money once we agree on a policy?
Most insurance companies write non-assessable policies for which there is only one rate. Therefore, if an insurance company has a year full of catastrophes, it cannot ask the policyholder for more money. On an assessable policy, the insurance company could ask the insured for more money to cover losses.
May I cancel my homeowner policy?
Yes, you may cancel your insurance at any time and the insurance company will return the appropriate amount of pre-paid premium. However, if there is an existing mortgage on your home, be sure to have another policy in place because mortgage companies require that you have adequate homeowner insurance coverage.
Can my insurance company cancel my homeowner policy?
Yes, although this is rare. There are legal provisions that allow an insurance company to cancel your homeowner insurance. The most frequent reason for cancellation is non-payment of premium by the insured. Insurance companies must have good reason to cancel a policy, and ample notice must always be given.
What is insurance-to-value?
Insurance-to-Value means having adequate coverage for the actual replacement value of your home in the event that a loss occurs.
What is "replacement cost" and "actual cash value"?
Replacement Cost is the amount of money you would need to spend to replace your home with another of like kind and quality on the same site. Actual Cash Value is the replacement cost less depreciation. To determine the actual cash value, the general condition and character of your home are taken into account. Replacement Cost and Actual Cash Value are generally used in reference to the home, not to the land it is built on.
What is coinsurance?
Coinsurance is a provision in a homeowner insurance policy that states that if you fail to carry at least 80 percent of the replacement cost of the property, you may receive a reduced loss settlement. The coinsurance clause relates to the value of the property when the loss occurs, not the time at which the policy was written. Most policies have a coinsurance provision.
Could you give me an example that explains coinsurance?
Assume that property valued at $100,000 is insured for only $40,000 and a loss of $40,000 occurred. If the policy had no coinsurance clause, you would get $40,000. If the policy contained the usual 80% coinsurance clause, you would get only $20,000. Because you carried only one-half ($40,000) of the 80% ($80,000) insurance required by the coinsurance clause, you would receive only one-half ($20,000) of the $40,000 loss.
What is a deductible?
The deductible is the initial amount of the loss for which the policyholder is responsible. The insurance company is responsible for the amount in excess of the deductible up to specified limits.
What does "loss away from premises" mean?
Loss away from premises is a loss incurred by the policyholder while he or she is away from the home, for example, if a theft occurred in a hotel room while the policyholder was on vacation.
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