Insurance Coverage – Homeowners Insurance Tips and News Fri, 28 Jun 2013 15:01:02 +0000 en-US hourly 1 Know What Your Homeowners Insurance Covers Thu, 04 Nov 2010 22:32:10 +0000

Truth be known, most of us don’t know beans about insurance. We know that certain forms of it are required, but that’s about it. We need auto insurance if we’re going to drive a car, we need homeowners insurance as long as we still owe money on our homes (and will keep it if we’re smart afterwards). Beyond that, most of us really don’t know a whole lot about our insurance policies.

Unfortunately, when it comes to homeowners insurance, many of us don’t get educated regarding what is or isn’t covered until it’s time to put in a claim. And all too often, what we find out is not exactly good news.

Generally speaking, most homeowners insurance policies will cover you against the following things:

  • Damage to the home from wind, hail, lightning, and other storm related damage.
  • Theft from the premises.
  • Liability for anyone who is injured on the property, as long as the injury was not the result of gross negligence on your part.
  • Damage or destruction of your home due to fire.
  • Loss of possessions (furniture, jewelry, appliances, clothing, etc.) as a result of any of the above.

Perhaps even more important, you should know what your homeowners insurance does NOT cover. While this differs from policy to policy, most homeowners insurance policies do not cover the following, unless the policy states otherwise:

  • Flood and other water damage.
  • Loss of use. In other words, your insurance will pay to replace your home, but your on your own affording new digs while your home is being rebuilt or repaired.

It can be tempting to shop for homeowners insurance like you would shop for most anything else, by simply comparing bottom line prices. Let me assure you, this is not a good idea. Make sure your insurance agent goes over exactly what your policy does and does not cover with you. You should also make sure that you are fully aware of what your deductible will be if you need to make a claim. The last thing you want is to have a major loss and discover that your insurance doesn’t cover the particular type of damage.

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The Devil’s in the Details: What’s Not Covered Wed, 20 Oct 2010 15:38:19 +0000

Most people look forward to reading every line of their homeowners insurance policy about as much as teenagers look forward to bedtime. Instead of pouring over the details, they look their agent in the eye, shake hands firmly, and rely on their trust in that relationship to protect them in case the worst should happen.

If you haven’t checked out your homeowners policy lately, though, there may be a few things you’re missing. Most policies have limitations and exclusions that could make you mad as a hatter if you find out too late. While there is no standard policy, many insurers have begun implementing standard limitations and exclusions.

  • Dog Bites. Dog bite claims have gotten so expensive in recent years, many insurers are dropping coverage altogether. Others exclude certain dog breeds, while still others have a one-strike policy. In cases where dog bites are still covered, many policies limit the benefit amount, which could leave you exposed financially if your dog bites someone on your property. If you’re a dog owner, you should find out what coverage limitations and exclusions are in your policy, and take steps to prevent your dog from biting.
  • Floods. Homes in flood-prone areas are required by law to have flood insurance. Many floods, however, happen outside the flood zones and cause extensive damage to homes. Homeowners insurance does not cover flooding in most cases, but you can purchase separate flood insurance at an additional cost.
  • Theft. While theft is usually a covered event on most homeowners policies, there may be limitations to the benefit amount. For example, most policies will cover only about $1,000 to $2,000 for theft of jewelry, and losses for cash on hand is usually limited to about $100. To increase your coverage for loss from theft, purchase a personal property floater, or scheduled personal property endorsement, which can typically be added on as a rider to your existing policy.
  • Home Businesses. Although most policies cover office equipment in residential policies, they often cap coverage at $2,500 – $3,000. If you have a computer, fax machine, printer, copier, scanner, and other digital devices that you use for business purposes, chances are your homeowners policy supply you enough coverage to protect you fully against losses. In addition, if a client or anyone else slips and hurts themselves on your property, your homeowners policy won’t protect you against liability. To make sure you’re covered, investigate the option of adding a home business rider to your existing policy.
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Do I Need Hazard Insurance? Wed, 13 Oct 2010 21:29:46 +0000

A typical homeowners insurance policy won’t necessarily cover all the different events that could cause damage to your property. While most policies cover fire, wind, and severe storm damage, certain areas are more prone to different kinds of natural disasters, and the more likely the damage from a specific type of event, the less likely it is that your homeowners insurance policy will cover it.

  • Know your exclusions. Most policies come with certain exclusions, meaning the policy won’t pay out for certain things. Many insurers are now excluding dog bites, for instance, because of the rise in both the number and expense of dog bite claims. But your insurer may exclude other types of damage based on the risk. If the risk is very high in your area, chances are the damage will not be covered.
  • Know the area. If you’ve lived in the area all your life, you probably already know what risks there are. Midwestern homeowners experience a higher likelihood of tornadoes, while Floridians are at risk of hurricane damage. Homes in California often need earthquake insurance, but houses in other areas could also be at risk. If you are new to the area, ask your neighbors about their homeowners insurance policies to get a feel for what is usually covered. This can also be a great way to find a good insurance company.
  • Hazard insurance is not liability coverage. While homeowners insurance typically covers both property damage and liability for accidents, hazard insurance does not. Instead, it covers property damage that results from specific events such as fire, wind, storm, or other natural disasters, depending on what is specified in the policy.
  • Be sure to ask. Your insurance sales agent is your best bet for determining what is covered by your policy and what is not. You can also review your policy to see what is and is not covered.
  • Flood zones. If you live in an area at high risk of flooding, your lender is required by law to force you to buy flood insurance. Areas that are at elevated risk for other disasters or weather events may not have the same rules. If your policy excludes damage from wind or severe storms, you should look into buying hazard insurance that covers it.

The best way to be sure you are covered in the event of vandalism, fire, flood, earthquake, or windstorm is to review your policy. If there are exclusions for any of these types of events, you probably can (and should) look for hazard insurance separately.

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Covering your Butt with Homeowners Insurance Thu, 21 Jan 2010 19:04:17 +0000 jeansGetting homeowners insurance is easy enough. You call up your insurance agent or log onto a website, pick the cheapest price, pay your premium and you’re settled.

Unless, of course, you actually have to make a homeowners insurance claim. Then you’re completely screwed. You didn’t pay attention to what your policy actually does – you just wanted to get coverage enough so that the mortgage lender would agree to close the deal. Now, you’re stuck with potentially thousands of dollars of repairs to make and no way to pay for it.

Fortunately, you can avoid this kind of situation. Taking a few minutes to think about the kind of homeowners insurance coverage you need can save you tons of time and money down the road.

Here are things you can do to make sure you have adequate homeowners insurance coverage:

  1. Review your policy annually. When you get your yearly renewal notice, talk to your agent. Ask if she can come out to see if you need to make some adjustments based on remodeling or expensive purchases.
  2. Don’t skimp on the replacement cost. Many Americans are underinsured, plain and simple. You need to figure out what it would take to build yourself a new house like the one you have today from the ground up. The insurance company will suggest a replacement value, but you should consider an independent appraisal to get a good feel for it.
  3. Remember your contents. The possessions inside your house add up quickly. Between your plasma TV, your laptop and that nice new dining room set you bought, you need to make sure you have adequate coverage on the contents.
  4. Know the specifics. Don’t assume you’re covered for things like storm damage, mold problems or flooding. Check the language in your policy and add riders for specific types of coverage you’d like to have.
  5. Protect yourself. There are two aspects to this. One is to never let your policy lapse. Make sure your payments are correct and on time. You should also keep a copy of important policy paperwork in a fireproof and waterproof safe. It wouldn’t hurt to have pictures of the contents of your home, too.

Photo via bluryee

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