Why You Need Homeowner's Insurance

The largest single investment most consumers make is their home. The consumer can protect his or her home, possessions, and liability with a homeowner's insurance policy.

In addition to its availability to homeowners, similar coverage is available to those who rent homes or apartments. These policies are referred to as tenants' or renters' homeowner's policies. If you are a renter, you do not need protection against damage to the building itself, but you do need protection against damage to or theft of your personal property and liability in the event someone falls or gets hurt on the part of the premises you rent.

A condominium owner may purchase a condominium homeowner's policy to insure personal property. Some policies may also include additions or alterations insured by the condominium association. It is important to check with your condominium association and your agent before buying a policy to make sure you are adequately covered.

Basic Coverages Included in Homeowner's Policies

The homeowner's insurance policy is a package policy that combines more than one type of insurance coverage in a single policy. There are four types of coverages that are contained in the homeowner's policy:

• Dwelling and Personal Property

• Personal Liability

• Medical Payments

• Additional Living Expenses

Property Damage Coverage

Property damage coverage helps pay for damage to your home and personal property. Other structures such as a detached garage, a tool shed, or any other building on your property are usually covered for 10% of the amount of coverage on your house.

Personal property coverage will pay for personal property including household furniture, clothing, and other personal belongings. The amount of insurance coverage is normally 50% of the policy limit on your dwelliing. The coverage is also limited by the types of loss listed in the policy. The coverage only pays the current cash value of the item destroyed, unless you purchase replacement cost coverage.

Your homeowner's policy also provides off-premises coverage. This means that the policy covers your belongings against theft even when they are not inside your home. Your insurer will reimburse you for the cost of replacing your suitcase and its contents if it were lost or stolen while you were on vacation, but only for replacing them with items of like kind and quality.

Personal Property Floater

Your homeowner's insurance policy may provide only limited coverage for furs, jewelry, silver, and other valuables. It may be necessary to insure these valuables with a special addition to your homeowner's policy, such as a personal property floater. A personal property floater itemizes each article, gives a description of the article insured, and lists excluded perils. It often provides coverage that is broader than the coverage granted in the home insurance policy. You should discuss this with your insurance company or agent to determine the availability and cost of this additional coverage.

Your homeowner's insurance policy does not cover your pets, your car, or any aircraft. Although your policy does not cover your pet or damage it does to your possessions, it will cover damage your pet does to others or their possessions.

Personal Liability Coverage

Homeowner's policies provide personal liability coverage that applies to non-auto accidents on and off your property if the injury or damage is caused by you, a member of your family, or your pet. The liability coverage in your policy pays both for the cost of defending you and for any damages the court rules you must pay. Unlike the other coverage in your policy, liability insurance does not have a deductible that you must meet before the insurer begins to pay losses. The basic limit for liability coverage is $100,000 for each occurrence. You can request higher limits that are available at an additional cost.

Medical Payments Coverage

Medical payments coverage pays if someone outside your family is injured at your home regardless of fault. This includes payment for reasonable medical expenses incurred within one year from the date of loss for a person who is injured in an accident in your home. The coverage does not apply to you and members of your household. The medical payments portion of your homeowner's policy will also pay if you are involved in the injury of another person away from your home in some limited circumstances. Medical payments coverage limits are generally $1000 for each person. Higher limits are available for an additional cost.

The Homeowner's Policy (HO-3)

The homeowner's policy provides protection against the financial consequences of personal losses. A homeowner's policy is a combination of property and liability coverages. The homeowners (HO-3) policy is tailored to meet the needs of the homeowner. The following is a basic outline of the homeowners (HO-3) policy and the endorsements most widely used on the HO-3 policy.

The HO-3 policy provides coverages for one or two family dwellings that are owner occupied. The HO-3 policy provides coverage against risks of direct physical loss to real property, except for those causes of loss that are specifically excluded. Personal property is covered against direct physical loss caused by a specific peril. In addition to the coverages stated under Section I, several additional coverages are included. Some of the coverages included are; debris removal, fire department charges, reasonable repairs charges, property removal charges, and coverage for trees, shrubs, and plants. Coverage is also included for loss involving credit cards, forgery, and counterfeit money. These additional coverages are included to provide protection for the insured following a covered property loss. Each additional coverage has limitations and is subject to certain conditions.

Dwelling

This amount of insurance applies to the dwelling and attached structures. The limit of insurance for the dwelling is based on the value of the home and what it would cost to replace the home.

Other Structures

This coverage limit applies to detached structures such as a garage or storage shed. The limit of coverage is set at 10% of the dwelling. The insured can purchase a higher limit.

Personal Property

Coverage C provides worldwide coverage for personal property of the insured. Special limits apply to some types of property, and some property is excluded from coverage. The overall limit for coverage C is 50% of the dwelling limit. Coverage C can be modified in several ways with endorsements.

Loss of Use

This coverage applies in the event of a loss under Coverage A. If the insured was to temporarily lose use of the dwelling this coverage would apply. Payment would be made for expenses incurred to live elsewhere following a loss that makes the home unsuitable for living. Another method used to determine payment for loss of use is fair rental value, which is the amount of rent that could reasonably be charged for the premises, less any expenses that do not continue while the premises are unsuitable for living.

Personal Liability

Section II of the homeowners policy provides liability coverage for personal loss exposures. The insuring agreement under Coverage E provides liability coverage if a claim is made or suit is brought against an insured because of bodily injury or property damage. Coverage is provided for the residence premise as well as any other premises used by the insured, as a residence, permanently or temporarily. Liability coverage is provided for the named insured and members of the named insured's household who are relatives. Personal liability has a basic limit of $100,000 per occurrence, which the insured may increase for an additional premium. In addition to the basic limit, Coverage E also provides additional coverages for expenses such as defense cost, expenses incurred providing first aid to others, damage to property of others and loss assessment charges. The additional coverages provided under Section E are subject to limitations and certain conditions.

Medical Payments

This coverage will pay the necessary medical expenses for bodily injury of others. Coverage applies to accidents that occur on the insured premises or any location when caused by the action of the insured. The coverage has a basic limit of $1000 per person. The insured may select higher limits.

Endorsements

Inflation Guard Endorsement

When this endorsement is added to the policy, it increases the limit of coverage for A, B, C and D. The insured selects the percentage increase for the year and the limits are automatically increased at certain dates throughout the year.

Earthquake Coverage Endorsement

Earthquake coverage is excluded under Section I of a homeowner's policy. Adding this endorsement removes the exclusion and adds earthquake coverage which is subject to a deductible for each coverage under Section I.

Increase Other Structures Limit

This endorsement increases the limit under coverage B, Other Structures. The limit for unattached structures on the residence premise would be increased, and the increase would be in addition to the limit already provided.

Increase Special Limits

Certain types of personal property under Coverage C have special limits of liability. Adding this endorsement increases the limit for those particular types of property.

Scheduled Personal Property

The scheduled personal property endorsement is used to provide coverage for risk of direct loss for such items as jewelry, furs, cameras, musical instruments, silverware, golfer's equipment, fine arts, postage stamps and rare coins. Scheduled property can be insured for any amount the insured requires.

Personal Property Replacement Cost

Property loss settlements under the homeowners policy are made on an actual cash value basis. When the replacement cost endorsement is added, the loss settlement payment would be sufficient to replace the item for the cost at the time of loss without deductions for depreciation.

To find out more, or to discuss any of our many other insurance options, please request a quote online, or give us a call at (715) 387-4443 or toll free (877) 635-3467 today.