Homeowners Policy Details
What is homeowners insurance?
Homeowners insurance provides financial protection
against disasters. A standard policy insures the
home itself and the things you keep in it.
Homeowners insurance is a package policy. This means
that it covers both damage to your property and your
liability or legal responsibility for any injuries
and property damage you or members of your family
cause to other people. This includes damage caused
by household pets.
Damage caused by most disasters is covered but there
are exceptions. The most significant are damage
caused by floods, earthquakes and poor maintenance.
You must buy two separate policies for flood and
earthquake coverage. Maintenance-related problems
are the homeowners' responsibility.
What is in a standard homeowners insurance
policy?
A standard homeowners insurance policy includes four
essential types of coverage. They include:
1. Coverage for the structure of your home.
This part of your policy pays to repair or rebuild
your home if it is damaged or destroyed by fire,
hurricane, hail, lightning or other disaster listed
in your policy. It will not pay for damage caused by
a flood, earthquake or routine wear and tear. When
purchasing coverage for the structure of your home,
it is important to buy enough to rebuild your home.
Most standard policies also cover structures that
are detached from your home such as a garage, tool
shed or gazebo. Generally, these structures are
covered for about 10% of the amount of insurance you
have on the structure of your home. If you need more
coverage, talk to your insurance agent about
purchasing more insurance.
2. Coverage for your personal belongings.
Your furniture, clothes, sports equipment and other
personal items are covered if they are stolen or
destroyed by fire, hurricane or other insured
disaster. Most companies provide coverage for 50% to
70% of the amount of insurance you have on the
structure of your home. So if you have $100,000
worth of insurance on the structure of your home,
you would have between $50,000 to $70,000 worth of
coverage for your belongings. The best way to
determine if this is enough coverage is to conduct a
home inventory.
This part of your policy includes off-premises
coverage. This means that your belongings are
covered anywhere in the world, unless you have
decided against off-premises coverage. Some
companies limit the amount to 10% of the amount of
insurance you have for your possessions. You have up
to $500 of coverage for unauthorized use of your
credit cards.
Expensive items like jewelry, furs and silverware
are covered, but there are usually dollar limits if
they are stolen. Generally, you are covered for
between $1,000 to $2,000 for all of your jewelry and
furs. To insure these items to their full value,
purchase a special personal property endorsement or
floater and insure the item for it's appraised
value. Coverage includes “accidental disappearance,
” meaning coverage if you simply lose that item. And
there is no deductible.
Trees, plants and shrubs are also covered under
standard homeowners insurance. Generally you are
covered for 5% of the insurance on the house –- up
to about $500 per item. Perils covered are theft,
fire, lightning, explosion, vandalism, riot and even
falling aircraft. They are not covered for damage by
wind or disease.
3. Liability protection.
This covers you against lawsuits for bodily injury
or property damage that you or family members cause
to other people. It also pays for damage caused by
your pets. So, if your son, daughter or dog
accidentally ruins your neighbor’s expensive rug,
you are covered. However, if they destroy your rug,
you are not covered.
The liability portion of your policy pays for both
the cost of defending you in court and any court
awards -- up to the limit of your policy. You are
also covered not just in your home, but anywhere in
the world.
Liability limits generally start at about $100,000.
However, experts recommend that you purchase at
least $300,000 worth of protection. Some people feel
more comfortable with even more coverage. You can
purchase an umbrella or excess liability policy
which provides broader coverage, including claims
against you for libel and slander, as well as higher
liability limits. Generally, umbrella policies cost
between $200 to $350 for $1 million of additional
liability protection.
Your policy also provides no-fault medical coverage.
In the event a friend or neighbor is injured in your
home, he or she can simply submit medical bills to
your insurance company. This way, expenses are paid
without their filing a liability claim against you.
You can generally get $1,000 to $5,000 worth of this
coverage. It does not, however, pay the medical
bills for your family or your pet.
4. Additional living expenses in the event you
are temporarily unable to live in your home because
of a fire or other insured disaster.
This pays the additional costs of living away from
home if you can't live there due to damage from a
fire, storm or other insured disaster. It covers
hotel bills, restaurant meals and other living
expenses incurred while your home is being rebuilt.
Coverage for additional living expenses differs from
company to company. Many policies provide coverage
for about 20% of the insurance on your house. You
can increase this coverage, however, for an
additional premium. Some companies sell a policy
that provides an unlimited amount of loss-of-use
coverage -- for a limited amount of time.
If you rent out part of your house, this coverage
will also reimburse you for the rent that you would
have collected from your tenant if your home had not
been destroyed.
Are there different types of policies?
Yes. A person who owns his or her home would have a
different policy from someone who rents. Policies
also differ on the amount of insurance coverage
provided.
The different types of homeowners policies are
fairly standard throughout the country. However,
individual states and companies may offer policies
that are slightly different or go by other names
such as “standard” or “deluxe”. The one exception is
the state of Texas, where policies vary somewhat
from policies in other states. The Texas Insurance
Department ( http://www.tdi.state.tx.us ) has
detailed information on its various homeowners
policies. You should consult with a professional
insurance consultant to determine which coverages
best suit your needs
If you own your home
If you own the home you live in, you have several
policies to choose from. The most popular policy is
the HO-3, which provides the broadest coverage.
Owners of multi-family homes generally purchase an
HO-3 with an endorsement to cover the risks
associated with having renters live in their homes.
HO-1: Limited coverage policy
This “bare bones” policy covers you against the
first 10 disasters. It's no longer available in most
states.
HO-2: Basic policy
It provides protection against all 16 disasters.
There is a version of HO-2 designed for mobile
homes.
HO-3: The most popular policy
This “special” policy protects your home from all
perils except those specifically excluded.
HO-8: Older home
Designed for older homes, this policy usually
reimburses you for damage on an actual cash value
basis which means replacement cost less
depreciation. Full replacement cost policies may not
be available for some older homes.
If you rent your home
HO4-Renter
Created specifically for those who rent the home
they live in, this policy protects your possessions
and any parts of the apartment that you own, such as
new kitchen cabinets you install, against all 16
disasters.
If you own a co-op or a condo
H0-6: condo/co-op A policy for those who own a condo
or co-op, it provides coverage for your belongings
and the structural parts of the building that you
own. It protects you against all 16 disasters.
Can I own a home without homeowners insurance?
Unlike driving a car, you can legally own a home
without homeowners insurance. But, if you have
bought your home and financed the purchase with a
mortgage, your lender will most likely require you
to get homeowners insurance coverage. That’s because
lenders need to protect their investment in your
home in case your house burns down or is badly
damaged.
After your mortgage is paid off, no one will force
you to buy homeowners insurance. But it doesn’t make
sense to cancel your policy and risk losing what
you’ve invested in your home. |
Renters insurance helps cover your valuables
Imagine for a moment that you've just returned home
from a along day at work to find that there has been
a fire. Everything you own has been destroyed: your
TV, VCR, stereo, CDs, dishes, furniture and
clothing. Who will replace all of your belongings?
Where will you stay until your apartment is
renovated?
If the unfortunate should happen and you suffer a
covered loss, a Renters package is the answer. It
will reimburse you for lost or damaged items, and if
the loss makes your home uninhabitable, it will also
pay the additional cost of hotel, meals and related
expenses. While renters insurance can't prevent a
fire or similar loss from occurring, it can bring
you back to where you were prior to the loss.
Your landlord carries insurance for losses that may
occur. Unfortunately, your landlord's policy
probably won't cover your personal belongings for
the same loss. The Renters package fills this gap
with the coverage necessary to replace lost or
damaged items
Benefits
Covered losses
These are some of the types of losses for which your
personal property is covered:
Theft
Vandalism
Smoke, if sudden and accidental
Sudden and accidental discharge of water or steam
from plumbing, heating or air conditioning system,
or household appliance
Fire or lightning
Windstorm or hail
Explosion
Glass breakage
Falling objects
Collapse of building
Vehicles
Weight of ice, snow or sleet
Riot or civil commotion
Aircraft
Additional Coverages
Loss of use
If you can't live in your home after a covered loss,
Renters Insurance can cover the additional cost of
living, meals, in hotels, etc. Your coverage pays up
to 20 percent coverage with no deductible for up to
one year.
Personal property away from home
This coverage applies to your personal property
anywhere in the world. However, if your personal
property is located at a secondary residence, such
as a vacation home, the policy can pays up to $1000
or 10 percent of the amount of coverage provided
under Personal Property coverage.
Personal Liability coverage
This coverage gives you and your family living with
you 24-hour-a-day liability protection against
claims caused by almost any unintended act,
including:
Acts of your pets
Unintended acts committed by you or qualified family
members, either on or off your premises Renters
insurance covers reasonable medical payments for
other people injured on your premises, regardless of
liability, up to certain limits stated on your
policy.
Necessary expenses you incur, including up to $60 a
day for actual loss of wages, are also covered.
Renters packages can even pays the premium on appeal
bonds, bonds to release attachments and of bail
bonds.
Emergency first aid
Your coverage pays expenses you incur for necessary
medical and surgical aid to other people at the time
of an accident covered by the policy.
Damage to property of others
Renters Insurance can pay replacement cost up to
$500 per loss for damage to the property of others
caused by a qualified member, even when you are not
legally liable.
Optional coverages
Personal Articles Floater
This extends coverage for your personal articles,
such as jewelry, furs or fine arts, when their value
is higher than the limits stated in the policy. It
pays up to the insured value of the article.
Contents Replacement Cost
Use this option to extend the coverage on your
personal property to include the cost of repair or
replacement without deduction for the depreciation,
but no more than the policy limit.
Discounts
Non-smoker discount
If the qualified family members of your household
have not smoked tobacco products in the past two
years, you may save money with Non-Smoker discount.
Protective Devices discount
Maintaining qualified protective devices, such as
fire alarms and deadbolt locks, may also qualify you
for additional discounts to your policy.
Renters Insurance offers flexible payment plans.
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