|Homing in on the right policy!!||Tips on Homeowners or Renters Insurance|
Whether you own or rent, live in an apartment, a condominium or a home, the following information outlines key areas of coverage as well as exclusions or limits that might apply to a homeowners or renters policy. Contact your local independent insurance agent for more information on homeowners insurance or click here.
Do I really need insurance for my home?
Insurance, any kind, is your protection against the uncertainties of day-to-day living. For most people, their home is their single most valuable possession and their biggest investment. Homeowners insurance protects your investment as well as you, the members of your family and your household possessions.
If you were to suddenly lose your home due to fire or a tornado or have the contents damaged or stolen, like most of us, you probably could not afford to replace everything all at once. And if somebody sued you for an injury or damage caused by you or your property, the cost of defending that suit could run into thousands of dollars just for legal fees regardless of the outcome of the suit.
All of these situations are covered by the homeowners package policy. And while it may be unpleasant to think about fire, theft, and other "uncertainties of life," let's face it, they are there and things happen.
Yet another reason you need to carry homeowners insurance is that mortgage lenders require it. No mortgage company will lend the large amounts of money needed to finance homes at today's prices without requiring an insurance policy to protect that investment.
What kinds of events am I protected against?
Remember that policies vary but homeowners insurance usually covers damage to both structures and personal property caused by:
- Fire or lightning
- Windstorm or hail
- Riot or civil commotion
- Theft or vandalism (sometimes called malicious mischief)
- Falling objects
- Weight of ice, snow or sleet
- Freezing of a plumbing, heating, air conditioning or other such household system
In fact, your coverage is most likely even more comprehensive than the above list. Many homeowners policies cover damage by "just about everything," unless the coverage is specifically excluded. In these cases, it is even more important to understand what is not covered.
What about floods, earthquakes and other catastrophes?
Are the backyard shed and my color TV both covered in my homeowners policy?
Yes, they are both your property so they are both covered. The value of the real property--your home, garage, shed and other structures--is generally based on the value of the main structure, the house itself. Thus, if the house were insured for $75,000, the shed, detached garage and other auxiliary structures would be covered for 10 percent or $7,500 worth of damages. Additional property protection features may include living expenses should your home not be habitable for a period of time.
Your personal property is also covered by a homeowners insurance policy. Personal property includes the contents of your home and personal belongings used, owned, worn, or carried by you or members of your household - basically, everything and the kitchen sink! This coverage is also based on the house coverage, and there are limits on the losses that can be claimed. Higher limits can be purchased for both real and personal property.
Does my policy cover my possessions even when I go on vacation?
Yes, perhaps in this case the term "homeowners" is misleading because this is a package of insurance coverage that extends to all your possessions no matter where they are. If you take a round-the-world vacation and lose a valuable item, as long as the loss is by a covered event or peril, the location does not matter.
I rent out my basement. Are my tenants covered by my homeowners policy?
Your property and the structure (the basement) are covered by your policy as is your personal liability. However, the tenants' possessions and liability are not covered by your policy. Therefore, they may wish to purchase their own renters insurance. Whether you are a lessor or a renter, you should check with your agent to make sure you have the right coverage.
My mother lives with us in a separate in-law suite. Are her possessions covered?
As a member of the family, she is probably covered under your homeowners policy. So too is your child away at college covered for personal liability or theft or damage to his or her property even in the dormitory or college apartment. However, you should check with your agent to be sure of the extent of coverage.
What about our vacation home in the next state?
Insurance companies can operate in more than one state so the company that carries your primary residence may issue a policy for your vacation home. Personal liability is covered in the first homeowners policy so the second policy need cover only property. This type of policy is called a "dwelling policy."
If you rent out your second home for all or part of the year, your homeowners policy may need to be endorsed (added to) to cover the increased liability exposure. The renter's property is not covered under your dwelling policy. Should damage occur while someone is renting your property, they will need to check with their own agent about their coverage.
I work out of my home. Are my inventory and business property covered?
Yes, but within certain limits. Both are covered as personal property used for business purposes. However, like all personal property, there are monetary limits on reimbursement. Whether your home business is your primary occupation or a hobby that nets you a few hundred dollars a year, it is still a business and you should treat it as such. If you've invested quite a bit in equipment (woodworking tools, for example) and sell the occasional decoy, you should consider whether the personal property limits are sufficient.
Also, keep in mind that the personal liability protection in your homeowners policy does not extend to business liability. Check with your agent concerning your business insurance needs.
How much will I be paid for damage to my personal property?
Your policy lists the specific monetary limits for personal property under what is called "Special Limits." Those limits usually are:
- $200 for money, bank notes, gold and silver (other than goldware and silverware), platinum, coins and medals.
- $1,000 on securities, accounts, deeds, evidences of debt, letters of credit, notes (other than bank notes), manuscripts, passports, tickets and stamps.
- $1,000 on watercraft, including their trailers, furnishings, equipment and outboard motors.
- $1,000 on trailers not used for watercraft.
- $1,000 for loss by theft of jewelry, watches, furs, precious and semiprecious stones.
- $2,000 for loss by theft of firearms.
- $2,500 for loss by theft of silverware, silverplated ware, goldware, gold-plated ware and pewterware.
- $2,500 on property on the resident premises used for business and $250 on this property damaged or lost away from the premises.
These limits seem low, what about items that have a high value?
You need to speak to your independent agent about additional coverage for specific items (like a diamond engagement ring).
Remember that homeowners insurance is designed to cover general personal possessions, not valuable collections like antiques, jewelry or original art. Insurance companies deliberately limit their coverage of expensive possessions so that household premiums are more affordable to everyone. After all, if they had to cover museum-level art collections under standard homeowners policies, we would all end up paying higher premiums to cover those expensive items.
Help! I've lost everything! Where do I start?
It's true - if most of us suddenly found ourselves without anything due to some calamity, we would be hard pressed to know all that we had lost. When was the last time, for example, that you counted the number of shoes you own or CDs, not to even mention furniture, dishes, drapes, or audio and video equipment? And the list goes on and on. How much is it all worth and where would you start if you had to replace it?
Now is the time to make a list of major household items and possessions. Check with your agent for an inventory fom you could use. Just remember that, where possible, it is wise to list the serial number, date and cost of purchase, and even include the receipt if you can.
Another easy way to inventory your home is to use a video camera or take pictures of your home and its contents. As you take the video, you can also talk about the items and their date and cost of purchase.
Whichever method you choose, have a copy made and ask a friend or family member to hold on to it. Or store your copy in a safe deposit box. You could even check with your agent - he or she may be able to store a copy for you. That way if the worst happens and your home is destroyed, the inventory list will be safe at another location.
Is there anything I can do to lower my premiums?
Because your premium is based partly on the level of risk the insurance company must take, there are things you can do to lower your premium. Installing deadbolt locks (to discourage theft), fire extinguishers, smoke alarms, and burglar and fire alarms that alert your local police and fire stations can often save you up to 15 percent on your premium. Check with your agent before purchasing any of these items to see if your insurance carrier has specific requirements to qualify for the discount.
Many insurers also offer discounts if you insure both your home and automobile with the same company. Another way to save may be to increase the deductible on your homeowners policy. If your deductible is $100, it means that you agree to pay this amount first, and your insurance company will pay for damages that exceed this deductible. By increasing your deductible from $100 to $250, or even $500, this decreases the insurance company's risk, which may mean a savings in your premium.
Also, it pays to shop around for insurance coverage just like anything else. Of course, you may want to keep in mind that the extent of coverage also determines the premium cost, so the cheapest policy is not necessarily the best. Your insurance agent can help you evaluate the different policies and companies to find the one most suitable for you.
What do I do when my property is damaged or stolen?
Contact your agent as soon as possible. If there is damage to your home or possessions, make "emergency" repairs to protect yourself and your property from further damage, then call your agent. For example, if some of the windows in your home have been blown out by wind, you may board them up to prevent additional damage. In fact, your policy covers the cost of these emergency measures.
However, before setting about to make permanent repairs, call your agent. The insurance company has the right to inspect the property in its damaged condition. They may want to send a claims adjuster or instruct you to get an estimate from an independent contractor.
If you have property stolen, notify the police immediately and call your agent.
What if I am sued or found liable for injury to another person?
Liability covers bodily injury and property damage to others due to your negligence. The coverage applies to non-auto accidents that occur either at your residence or off the premises. Medical expense payments such as first aid can also be due to the injured party. Should you be sued or suspect that you may be, contact your agent immediately.
I am a renter, not a homeowner. Do I need insurance?
The same rule of thumb applies to renters as to homeowners. If catastrophe struck tomorrow, could you afford to replace everything you own? Or if you were sued, would you have enough money to pay legal fees and possibly settle the suit? If not, chances are you would benefit from the protection that renters insurance brings.
Renters insurance offers the same general personal property coverage and liability protection as a homeowners policy. Thus, your camera is insured while you are on vacation, and you are covered if your grandfather clock crashes into the apartment lobby's wall and leaves a gaping hole. In fact, most policies are surprisingly extensive and may include additional living expenses (also called loss-of-use coverage) if you are forced by fire or other damage to live elsewhere.
I own a condo. How is my policy different?
Condo owners insurance covers the same general areas outlined throughout this guide for homeowners in the important areas of personal property and liability. In addition, condo owners insurance provides coverage for some situations specific to condominium unit owners.
Usually, the condominium association buys insurance to cover the property (building and structures) and liability coverage for the general association. If you own a condominium unit, you may be responsible for covering from the "walls in" on your unit, that is, for your personal property and the interior of your unit (whatever area is excluded from the condo association's policy) as well as for your personal liability.
Sometimes, condo owners are assessed by their condo association for losses "outside the walls" that were not completely covered by the association's policy. For example, if the clubhouse is destroyed and the condo association did not have it insured, you could be assessed for a "share" amount needed to replace it. If you wish, check with your agent about adding such "loss assessment coverage" to your condo owners policy.