Q: Are there different types of homeowner insurance policies?
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
If you rent your home or apartment
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 listed perils.
If you own a co-op or a condo
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 listed perils.
Q: What affects home insurance prices?
The following factors will affect the pricing of your homeowners insurance:
* The amount of coverage you choose.
* Type of Construction: Frame houses usually cost more to insure than brick or masonry.
* Age of House: New homes may qualify for discounts. Some insurance companies offer limited coverage or may not insure older homes.
* Fire Protection: The number of fire hydrants and fire departments and the availability of water are some factors that determine your area’s fire protection class. You can save money
* If your home is equipped with burglar and / or fire alarm systems.
Q: How Much Homeowners Insurance Should I carry?
You need enough insurance to cover the cost to rebuild your home at current construction costs. Do not base your rebuilding costs on the price you paid for your home.
The cost of rebuilding could be more or less than the price you paid or could sell it for today.
Some banks require you to buy homeowners insurance to cover the amount of your mortgage. If the limit of your insurance policy is based on your mortgage, make sure it’s enough to cover the cost of rebuilding. For a quick estimate of the amount of insurance you need, multiply the total square footage of your home by local building costs per square foot. To find out construction costs in your community, call your local real estate agent, builders association or insurance agent.
Q: Do I need special coverage for jewelry and other valuables?
A standard homeowners policy includes coverage for jewelry and other precious items such as watches and furs. These items are covered for losses caused by all the perils included in your policy such as fire, windstorm, theft and vandalism. However, there are special limits of liability for certain items, meaning that the insurer will not pay more than the amount specified in the policy. One important limit is for the theft of jewelry. To keep coverage affordable because jewelry can be easily stolen, the standard policy has a relatively low limit of liability for theft, generally $1,500 or $2,500.
If you own valuable jewelry or other items that would be difficult to replace, there are two ways you can increase coverage: by raising the limit of liability or “scheduling” your individual pieces through the purchase of “floater” policies. Raising the limit of liability is the cheapest option; however, there may be a limit on the amount you can claim for the loss of any individual piece, say $2,000, when the overall limit is $5,000.
Scheduling each piece or item may cost more in premiums, but it offers broader protection because the floater covers losses of any type, including accidental losses—such as dropping your ring down the drain of the kitchen sink or leaving an expensive watch in a hotel room—that your homeowners insurance policy will not cover. Before purchasing a floater, you must have either an appraisal or a receipt.
Q: Does my homeowner insurance policy cover flood damage?
Generally, homeowner insurance policies do not offer protection against flood losses. Flood
insurance is available through the federal government’s National Flood Insurance Program.
Q: Should I purchase an umbrella liability policy?
If you are ever sued, your standard homeowners or auto policy will provide you with some liability coverage, paying for judgments against you and your attorney’s fees, up to a limit set in the policy. However, in our litigious society, you may want to have an extra layer of liability protection. That’s what a personal umbrella liability policy provides.
An umbrella policy kicks in when you reach the limit on the underlying liability coverage in a homeowners, renters, condo or auto policy. It will also cover you for things such as libel and slander. Most umbrella liability policies will also provide auto liability coverage on a worldwide basis.
For about $150 to $300 per year you can buy a $1 million personal umbrella liability policy.
Because the personal umbrella policy goes into effect after the underlying coverage is exhausted, there are certain limits that usually must be met in order to purchase this coverage. Most insurers will want you to have about $250,000 of liability insurance on your auto policy and $300,000 of liability insurance on your homeowners policy before selling you an umbrella liability policy for $1 million of additional coverage.
Q: How do I file a homeowners claim?
If someone has become injured on your property or if a violent storm destroys your home, you will need to file a claim with your insurance company. Remember, a homeowners policy is a contract between you and your insurance company. And there are rules and procedures that you and your insurer must follow..
Report any crime to the police
If you are the victim of a theft or your home has been vandalized or burglarized, report it to the police. Get a police report and the names of all law enforcement officers that you speak with.
Phone your agent or company immediately
Insurance policies place a time limit on filing claims. Find out what the time limit is. Ask questions: Am I covered? Does my claim exceed my deductible? (Your deductible is the amount of loss you agree to pay yourself when you buy a policy.) How long will it take to process my claim? Will I need to obtain estimates for repairs to structural damage?
Make temporary repairs
Take reasonable steps to protect your property from further damage. Save receipts for what you spend and submit them to your insurance company for reimbursement.
Prepare a list of lost or damaged articles
You are going to need to substantiate your loss. Avoid throwing out damaged items until the adjuster has visited your home. You should also consider photographing or videotaping the damage. Prepare a home inventory, make a copy for your adjuster and supply him or her with copies of receipts from damaged items.
If you need to relocate, keep your receipts
If your home is severely damaged and you need to find other accommodations while repairs are being made, keep records of all additional expenses incurred. Most homeowners insurance policies provide coverage for the “loss of use” of your home.
Get claim forms
Once your insurance company has been notified of your claim, the company is required to send you the necessary claim forms to you by the end of a specified time period. (The time period varies from state to state.) Return the properly filled out forms as soon as possible in order to avoid delays.
Have an adjuster inspect the damage to your home
Your insurance company will probably arrange for an adjuster to come and inspect your home.
Once you and your insurance company agree on the terms of your settlement, state laws require that you be sent payment promptly. In most cases, your claim will be processed quickly.