- Owners need it to protect their homes, businesses, and their personal property.
- Renters need it to protect their personal property.
- Both need it to protect against liability for injuring third persons or damaging their property.
- That depends on the value of your property. The more coverage you buy, the less you will have to pay out of your own pocket if you suffer a loss that damages your house or its contents.
- You also need enough personal liability coverage to protect you from claims brought against you by others.
- Your bank or mortgage company may insist that you insure your house for at least the amount of the mortgage.
- Insurers may require you to insure your house for a certain limit in order to obtain replacement cost coverage.
- Not necessarily. Mortgage lenders do require some kind of homeowners insurance because, like you, they have a big investment in your home. But mistakes do occur and messages do get lost. Some mortgages do include insurance premium payments in your monthly mortgage bills, but some do not.
- You may think the mortgage lender is paying for the insurance while the lender thinks you are paying for it.
- Ultimately it is your responsibility to know who is insuring your home and whether the premium has been paid.
- Contact your lender and insurance company to make sure your policy is in place and the premium is getting paid.
- Important Note: Some mortgage companies will supply a policy called “forced coverage” if a standard policy is not maintained. These policies are very expensive and protect only the interest of the mortgage company on the structure itself. It does not protect you or your belongings.
Wrong! A homeowner’s insurance policy may be one of the best investments you ever make. But that investment only pays off in very specific situations. If something you want to protect isn’t specifically listed in your policy, it probably isn’t covered.
- Your policy may pay for the repair or replacement of your house, but may not pay for the furniture and other contents.
- Some things inside your home may be covered while others are not, and damage from some kinds of disasters, such as floods, aren’t covered at all by ordinary policies.
- It is important to read your policy carefully and think about the amount of protection you need. If you want a type of coverage not listed in your policy, ask your insurer how to get it.
A number of factors influence the premium that you may be charged:
- Type of Construction: Brick houses usually have lower premium rates because they are less vulnerable to fire.
- Age of the Buildingsd: Newer buildings usually have lower premium rates than older ones. Some insurers may not want to cover very old houses at all or may provide only limited coverage.
- Fire Protection: Your building’s distance from a fire hydrant and the quality of your local fire department affect the price you will be charged.
- Amount of Coverage: The amount of coverage you buy will affect the price you pay.
- Deductible Amount: The higher the deductible you choose, the lower your premium will be.
- Discounts: There may be discounts available for such things as smoke alarms, sprinkler systems, and security systems.
- That depends on what you think you can afford to pay out of your own pocket in the event of a loss. The deductible applies only to property damage to your home or to its contents.
- There is no deductible on the personal liability portion of the policy that covers you for claims brought by others.
- A policy with a $500 deductible will cost less than one with a $250 deductible. You need to figure out what would be the highest amount that you could comfortably handle and shop around for the lowest price.
Whether you own or rent, there are different coverage packages available in the marketplace.
- Each package protects against certain specified perils – a peril is an event that causes loss or damage to property. Fire, windstorm, and theft are examples of specified perils (called Named Perils in insurance-speak).
- The policy usually covers: Property Damage, Additional Living Expense, Personal Liability, and Medical Payments.
- Homeowner’s insurance policies apply, typically, to most owner-occupied single family homes and are modified somewhat to fit the needs of Renters and Condominium Owners.
Property Damage coverage helps to pay for damage to your house or to your Personal Property.
- Other structures such as detached garages and tool sheds are also covered.
- You need to check with your agent or insurance company to determine if the amount of coverage on other structures is sufficient for your needs.
- You can choose to cover your house and contents for either Replacement Cost or Actual Cash Value
Personal Property is the contents of your home and other personal belongings owned by you and family members living with you.
Replacement Cost is the amount it would take to replace or rebuild your home or repair damage with materials of similar kind and quality without any deduction for depreciation.
- Many insurers require homeowners to insure their homes for at least 80 percent of the replacement cost.
- If the homeowner fails to insure for 80 percent of the replacement cost, a penalty is applied to partial losses. This penalty is usually referred to as CO-INSURANCE.
- Whether your home is insured for replacement value or actual cash value, it is important to keep track of its value. Check with your agent or insurance company at least once a year to make sure that your policy provides adequate coverage.
Depreciation is the decrease in value of property over time because of age or wear and tear.
Actual Cash Value (often referred to by its initials as ACV) is the amount it would take to repair or replace property less depreciation.
Motor Vehicles are NOT covered. There may be limited coverage for small boats.
- Check with your agent or with your insurer if you own a boat or a snowmobile or other recreational equipment.
Some forms of Personal Property such as jewelry, antiques, silverware, collectibles, computers, money and the like have some limited coverage under your policy but may need more coverage.
- Check with your agent or insurer about adding more coverage by Endorsement (also called a Floater or a Rider).
Most policies agree to pay some expenses if your home is damaged and you cannot live there while repairs are being made.
- These expenses could include limited hotel and restaurant costs and storage charges.
- You should realize, however, that you can claim Additional Living Expense only if the loss is caused by a covered peril.
This coverage protects you against claims brought against you by others asserting that they were hurt or that their property was damaged by something you did or failed to do.
- Personal Liability coverage will pay the claim and your legal fees but only up to the limit of liability so you need to be sure that you have picked a limit that you are comfortable with but which you also can afford.
- This coverage protects you and your family members who live with you.
- A couple of other things you need to know are that 1.) there is no coverage if the claims against you are related to the operation of an auto or arise out of business activities; and, 2.) there is no coverage for injury or damage that is intentionally caused by you or the members of you household.
Regardless of who is at fault, this coverage pays medical expenses for others accidentally injured on your property.
- Medical Payments coverage does not apply to you or members of your family who live with you.
- Like Personal Liability it also does not apply to injuries arising out of the operation of an auto or from activities involving your at-home business.
Yes. Depending on the value of your home or other possessions, you may be paying for more coverage than you really need, or for certain kinds of coverage that you are unlikely to ever use.
- Maybe you live very simply: you rent an apartment and have very few possessions. If so, the cost of insuring your possessions may be high compared to the cost of replacing them. If that’s the case for you, you might need little to no insurance at all.
- If you own your home, but have few possessions, you might need only “dwelling insurance,” a less expensive policy that protects the valuable asset or building itself but not the contents.
- However, you may still be asked for money or sued by someone who suffers an injury or other loss related to you or your home. Liability insurance can help pay these costs.