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Q1. What is Homeowners Insurance? |
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A: Homeowners insurance is an insurance policy that protects your home financially in the event of a disaster or accident that may occur on your property and in your home.
Fires, hurricanes, wind damage, oh my! While no one plans on losing their home to any of these perils, it unfortunately happens every day. Ask yourself this: If your home was ever destroyed because of a fire, wind damage or hail, for example, how would you pay to rebuild your home? That's where your homeowners insurance comes in. Homeowners insurance protects the investment you have made in your home by providing you with coverage for specific hazards.
But your home insurance doesn't stop there. In the event that someone was filing a lawsuit against you for accidental damage you caused to their property, how would you pay for the costly legal fees? Standard homeowners insurance also contains a liability portion that protects you and your family against lawsuits where another party finds you liable for damage to their property or person.
All in all, standard home insurance covers the following:
Coverage A- Dwelling
Coverage B- Other Structures on Your Property
Coverage C- Personal Property/Contents
Coverage D- Loss of Use
Coverage E- Personal Liability Protection
Coverage F- Medical Payments
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Q2. Can I own a home without homeowners insurance? |
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A: Unlike auto insurance, home insurance is not required unless you have a mortgage and owe money on your home.
Home insurance is never required by law; however, the financial institution that holds your mortgage will most likely require your home to be insured for at least the amount of your loan. Lenders require home insurance to protect their investment in case of a disaster that destroys or damages your home. While home insurance may not be required by a lender, it is recommended that every home owner insure their home and belongings to protect against a loss. Learn more about how much insurance you need.
The same holds true for flood and earthquake insurance. If you live in a flood zone or an area that is subject to a high number of earth quakes, your lender may require you to hold earthquake or flood insurance.
If you own a condo, apartment or townhome, the homeowners' board may require you to purchase a special policy to cover the common, shared areas of the building. Learn more about co-op insurance.
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Q3. How do I take a home inventory? |
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A: A home inventory may not seem like a high priority on your list of things to keep up with as a homeowner; however, in the event that these items were destroyed in a fire or other peril, this list will be your greatest asset.
A home inventory is simply a list of all of the possessions you have accumulated over the years. This inventory will not only help you determine how much insurance you need, it will also help your claims get settled faster in the event of a loss of your home.
When taking an inventory of your home, be sure to include everything except vehicles, animals and items that are insured under other policies. It is important to keep this document in a safe place outside of your home- such as in a safe deposit box or at a relative's house.
Our agents have compiled the following list of tips for creating a comprehensive home inventiory:
List every item of value in your home
Include serial numbers of items anywhere you can
Continuously update your home inventory as you acquire new items
If you have the receipt- include it!
Take Photos- take close-up and wide-angle shots, use a color camera or video camera if possible and have a family member in all pictures to help prove ownership
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Q4. How much does home insurance cost? |
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There are a great deal of factors that determine how much you will pay for homeowners insurance. Some of the factors you may have control over, others- you may not. However, it is always a good idea to be aware of what affects your rate and how you may be able to improve it.
Your Dwelling Coverage: Dwelling coverage is the amount of coverage you have to replace the structure of your home in the event of a loss. Your dwelling coverage is calculated by multiplying your home's square footage by your local building costs. Local building costs vary from region to region, however, you can get an estimate of your dwelling cost and local building costs by using our home insurance calculator.
Other Coverages: Aside from your dwelling coverage, there are other coverages included in your homeowners policy that may affect how much you pay. Contents coverage, other structures coverage and loss of use coverage are all typically set as a standard percentage of your dwelling coverage and can not be altered. However, Your Personal Liability and MedPay coverages offer some options for you as a homeowner. Personal liability limits, for example, can be increased to suit your needs. A standard homeowners policy would include a $100,000 personal liability limit. If you increased this limit to $500,000 or $1 million, you may see your rate increase. Some homeowners add endorsement to their policy to increase coverage for a specific item in their home such as fine jewelry, collectibles, etc. These endorsements may increase your monthly premium as well.
Home Construction: Some types of homes have been proven to be more able to withstand wind, hail and other perils making them less expensive to insure than others. For example, owners of brick homes will typically see a slightly lower homeowners insurance rate than a wood-home owner with a comparable policy. Also, the age of your home will affect your rate. Older homes; especially those with original electrical, plumbing and heating systems; are at more of a risk for loss. For this reason, homeowners with older homes might see a slightly higher rate than others.
Home Safety Features: As mentioned above, these are the features that affect your homeowners insurance that you may have some control over. Home insurance companies reward homeowners who have safe homes. Discounts are available for homes that:
Have burglar alarms
Have fire alarms
Are within a specific distance from a fire hydrant
Have deadbolt locks
Are within a specific distance from a fire department
Your Insurance Score: Another factor affecting your home insurance rate is your personal insurance score. Your personal insurance score is a number assigned to you by your insurance company that ranks your financial credit and insurance claims history. (See more here: Why do home insurance companies check credit scores?) Typically, the better your insurance score, the better rates you will be offered by home insurance companies. Maintaining good credit is one good way to keep a good credit score and secure lower rates.
The Area Where You Live: Lastly, part of what affects your home insurance rate is the geographical region of the U.S. that you live in. For example, if you live in coastal Florida, which is more prone to major hurricanes, you will see higher rates in that area as opposed to other parts of the country. The same goes for homeowners who live in areas prone to tornadoes, earthquakes and floods. Visit the Rates by State interactive map to see what homeowners are paying, on average, in your part of the country.
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Q5. What information do I need to provide to my insurance agent? |
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A: When calling a home insurance agent for a quote, be prepared to answer the following questions to ensure that you receive the best rate and most comprehensive policy possible.
Our home insurance agents are here to help you answer the following questions.
(click on a question for more information)
How much are your possessions worth?
What kind of liability coverage will you need?
How many people live in your home?
Do you rent or own?
What type of pets do you own?
What is the general condition of your home?
How much does home insurance cost?
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Q6. What type of home insurance coverage do I need for my condo? |
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A: Condo insurance is specifically designed to provide coverage for condominium owners.
Unlike the owner of a single-family home, a condominium owner does not need coverage for the entire building, instead, often just their unit. (Typically, condo owners are also required to pay into a Master Policy as well- more on this below.)
Condo insurance typically includes the following coverages:
Dwelling Coverage
Contents/Personal Property Coverage
Loss of Use Coverage
Personal Liability Coverage
Medical Payments
Dwelling Coverage for a condo owner covers structural improvements to the inside of the unit (typically from the studs of the walls in) in the event of a covered claim. This is unlike the dwelling coverage in a standard homeowners policy which provides coverage for the entire home (interior and exterior). The amount of dwelling coverage needed varies for condos and is based on upon the construction type of the condo. For example, a condo with standard, building grade materials might need $30,000 worth of coverage while a unit with upgraded appliances, wood floors and granite counter tops might need $100,000 worth of coverage. A home insurance agent can best help you determine your coverage.
Contents Coverage or Personal Property Coverage for a condo policy covers your personal belongings inside the unit including (but not limited to) furniture, clothing, electronics, etc. There are limits for each item, however, and you can schedule an endorsement on your policy if you have any one item that exceeds those limits and needs extended coverage. For example, a standard condo policy typically has a maximum payout of $1500 for jewelry. If the value of your jewelry exceeds that limit you can schedule an endorsement (or rider) to protect specific valuable pieces.
Loss of Use Coverage protects a condo owner in the event that their condo is damaged in a covered claim and they must seek shelter elsewhere while it is being repaired. Loss of use coverage helps pay for room and board, dining, dry cleaning, etc. while you are unable to reside in your condo.
Personal Liability Coverage protects a condo owner in the event they are involved in lawsuit where they, or an immediate family member who also lives in the condo, are being sued for damages they have caused to another person or another person's personal property. Most policies typically carry a minimum of $100,000, however, those limits can be increased.
Medical Payments Coverage, also known as MedPay, is a coverage that protects a condo owner in the event someone is injured in their condo and the condo owner wants to pay the medical bills. For example, if a friends slips in your kitchen and requires medical attention, your MedPay would pay for the medical bills up to the limits in your policy. Medical payments coverage is only for a situation where a lawsuit is not involved and carries limits like all other coverages. Most condo policies have medical payments coverage of up to $2,000per incident but that can be increased.
Condo owners also typically are required to pay into a Master Policy which covers the shared areas of the condominium building. The master policy covers areas of the building such as hallways, the roof, the laundry room, basement, entry ways and stairwells.
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Q7. Do I need separate coverage for jewelry? |
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A: Coverage for stolen or destroyed jewelry and other precious items such as furs, chinaware, watches, etc. is typically included in a standard homeowners policy.
The coverage, however, is limited to the amount specified in your policy. Many standard home insurance policies will cover only about $1500 for jewelry but not exceeding $1000 for any one article. If you determine that you need more insurance coverage for your jewelry and other valuable items, contact an agent to discuss options for increasing your limit of this portion of your policy.
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Q8. What is an umbrella liability policy? |
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A: An umbrella liability policy serves as an extension of the liability coverage already included in your standard home insurance policy.
As the name suggests, an umbrella liability policy is there to protect you in stormy financial weather- in the case of a lawsuit against you or a family member. It typically provides protection up to the limits specified in the policy for the following:
Claims of bodily injury or property damage that are caused by either you or a member of your household
Claims of bodily injury that occur on your property or due to hazards on your property
Additional coverage above your auto policy for auto related liabilities
Protection against personal injury claims such as libel, slander, wrongful eviction and false arrest.
Costs for legal defense for a covered loss, including attorneys' fees and court costsbr>
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Q9. What is the difference between actual cash value and replacement cost coverage? |
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Replacement Cost Coverage versus Actual Cash Value (ACV)
Replacement Cost Coverage and Actual Cash Value refer to the type of replacement that your homeowners insurance policy offers for your dwelling and contents coverage.
Replacement Cost Coverage: Replacement Cost Coverage is the most common type of coverage offered under a standard homeowners insurance policy. Replacement cost coverage simply means that in the event that your home was damaged or lost in a covered peril, your home insurance company would pay to replace your home or repair damages with materials of similar kind and quality without deducting for depreciation.
Replacement Cost coverage may also apply to your home contents. Under a replacement cost coverage policy, your furnishings, clothing and other home contents would be replaced with items of like kind and quality. So, if your 5 year old flat-screen television was ruined in a covered fire, your home insurance company would replace it with a new flat screen television of equal quality.
Actual Cash Value: Actual Cash Value is a type of coverage that some basic home insurance dwelling policies offer where your home and contents are replaced with items of like kind and value minus depreciation. In this situation, if your home was damaged in a covered peril, your home insurance company would pay the actual cash value of your home before the loss.
The same goes for your home's contents. If you had a 10 year old television that was worth $1500 when you bought it, but only worth $200 today- your home insurance company would replace your TV with a $200 television, or the actual cash value of the television today after depreciation.
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