Home Insurance Coverage Basics

This coverage insures the structure, your home, and attached structures from damage resulting from these perils:

 Fire and lightning

 Windstorm and hail

 Explosions

 Theft, vandalism, and malicious mischief

 Riot and civil unrest

 Damage from vehicles

 Sudden, accidental damage from smoke

 Aircraft and objects falling from the sky

 Volcanic eruptions

 Weight of snow, ice, and sleet

 Accidental discharge or overflow of water or steam from your plumbing

 Freezing of plumbing

 Sudden, accidental tearing, cracking, burning or bulging of a steam pipe or hot water heating system

 Sudden and accidental damage from artificially generated electrical current

A home insurance policy will exclude a loss due to flood, earthquake, and landslide. Flood insurance is available through the federal government’s National Flood Insurance Program, for an additional premium earthquake insurance and landslide insurance are available as additional coverage options if your home qualifies.

There are two types of replacement for your home.

1. Guaranteed Replacement Cost. With this type of coverage, once you’ve met your deductible, the insurer promises to pick up the cost for rebuilding your home regardless of what the cost is to rebuild the home. If your home is insured for $200,000 and it ends up costing $275,000 the company will rebuild it without carrying any of that cost over to the you. Most companies have eliminated this type of coverage.
2. Extended Replacement Cost. This is designed to cover rebuilding your home based on the declared value on your policy with an additional 25% – 50% cushion to protect you if there is an increase in labor and building materials.

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

‘Other Structures’ is considered to be separate and distinct from the dwelling by clear space or connected to the dwelling by a fence, wall, wire, or a similar type of connection. Most policies provide your other structure coverage limit at 10% of whatever your home is insured at. Examples of these types of structures would include a barn, shed, detached garage, gazebo, fence or other structure not attached to your home. The other structures coverage insures these structures against the same risks that covers your dwelling.

The personal property or personal belongings insurance portion of your home insurance policy protects loss or damage to your personal property. Most policies provide your personal property coverage limit at 70% of whatever replacement cost limit your home is insured at.

Property used for business purpose isn’t considered personal property and limited coverage is provided. If you have more than $5,000 in property that’s used for business purposes please let me know so I can provide you with a commercial insurance quote to provide coverage for your business property.

There are often limitations with property coverage and some property might not have full replacement cost coverage. Adding a schedule will insure your property on a scheduled basis, this means that each item is listed and described on your policy. This will provide a separate limit of insurance for each, based on an appraisal or bill of sale.

The types of property for which this coverage is used is jewelry, furs, cameras and photographic equipment, musical instruments and equipment, silverware, golf equipment, stamp and coin collections, and fine arts.

With a schedule there are:

 No limitations or exclusions as the schedule will cover any type of loss other than wear and tear.

 There is no deductible to pay when you file a claim with a scheduled piece of property.

An inventory of your personal belongings is a good idea. When you have to file a claim it is to your advantage when you have documentation to prove your losses. When creating this inventory provide the serial number, date, cost of purchase and include receipts if possible. An easy way to inventory your possessions is to use a video camera or take digital photos and forward those pictures to a web based email account so you can access them anywhere.

You can create a home inventory by downloading this personal organizer.

Why create a personal organizer?

Remembering all the contents of your house and garage after a fire, theft, or other calamity is practically impossible. That’s what you’ll be asked to do when you submit a claim on your homeowner’s insurance, unless you previously prepared a written inventory of your household possessions and property. Considering that the whole point of buying homeowner’s insurance is to obtain compensation for financial loss, why bet the farm (or your house and its contents) on your memory, or add to the emotional loss and stress which comes from any type of loss?

If your home is not fit to live in as a result of a loss, your home insurance policy will cover your “additional living expenses”. The policy will provide reimbursement for your families household’s living expenses while you wait to permanently relocate or wait for the dwelling to be repaired. The dollar limit on this type of coverage is typically 20% of your home’s replacement cost limit. There may also be a time limit on this type of coverage such as 12 or 24 months.

An example of how this coverage works would be if your mortgage is $1,500 per month, you suffer a loss and it costs you $3,000 to stay in a hotel for a month you would be reimbursed for the difference in your living expenses. Also if you needed to board a pet in a kennel and eat out at restaurants this is the coverage that pays for expenses beyond what you’d normally pay for daily living.

If you or another insured are found responsible & liable for personal injury or property damage suffered by another person, your insurance company will investigate the event and might offer a settlement amount owed to that person through your liability coverage. This is only true if carelessness or negligence, rather than intentional misconduct, caused the injury or damage.

For example, you may be found negligent if a postal worker was injured by falling off your tricky front stairs because the railing was broken (and you knew about the situation but failed to repair it). You may also be found liable for intentional misconduct if you cut down a tree on your neighbor’s property to improve your view.

There is no deductible with liability claims.

If a nonresident of the home requires medical assistance as a result of a minor injury suffered on or near your premises, your insurance company can pay his or her medical expenses with the medical payment to others coverage. This covers necessary medical expenses incurred within 3 years of an accident causing bodily injury and would include charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, and funeral services.

Medical payments to others does not apply to injuries of named insureds or any regular resident of the household. Medical payments to others is a good will payment in the hopes of preventing a larger lawsuit down the road as the payment should not be construed as admitting liability.