Understanding homeowners insurance
A home is usually the largest purchase you will make. Protecting this major investment can be important to your family’s financial future.
If you have a mortgage, your lender will require you to have homeowner insurance. If you do not have a mortgage, it is a good idea to protect your investment and buy homeowner insurance.
What it covers
Homeowner insurance pays for damage to your home and other structures on your property. It also may cover:
- Damage to or loss to contents of your home
- Your liability for accidents that occur on your property or for damage to others’ property
- Insurance companies may pay for additional living expenses (hotel, meals, and more) due to fire or other covered events
What it does not cover
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Floods: Flood insurance is typically provided through the National Flood Insurance Program. You must buy flood insurance through an agent. Get a referral at 888-379-9531 (toll-free).
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Earthquakes: You can buy earthquake as a separate endorsement to your homeowner or renter policy or as a stand-alone policy that is separate from your homeowner policy.
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Landslides (earth movement)
are not covered. This type of coverage may be difficult to obtain. Talk to an agent.
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Cannabis related properties: There may be coverage gaps when insuring cannabis related properties.
Rates and underwriting
Insurance companies use a process called underwriting to decide whether to sell you a policy and how much to charge you. Each company's rules are different. To learn more about underwriting, premium increases, and how to find coverage if your policy is canceled, see below.
Home insurance 101
Replacement-cost coverage pays to replace your home and belongings with materials of "like kind and quality" at current prices. Actual cash-value policies reimburse the depreciated value. A replacement-cost policy will usually cost a little more. Some companies no longer offer replacement-cost coverage.
Your company must send you notice at least 10 days in advance of your policy being canceled because you have not paid your premium. This may be a late billing notice. If your policy has been "nonrenewed" (the company is not continuing to cover you for a reason other than nonpayment), the company must give you at least 30 days' notice.
Most homeowner policies have dollar limits on certain belongings, such as silverware, guns, jewelry, watches, furs, and computers. Talk to your agent or insurance company about increasing these limits to meet your individual needs.
Generally, insurance policies exclude damage caused by seepage, dry rot, or pests. This is because these problems are usually the result of poor maintenance, not a "sudden and accidental" event. Insurance companies may cancel your policy if your property has deteriorated to a point that it no longer meets the company's underwriting standards.
The appraised value of your property is the value when the appraisal was made. Your property may have lost value since your last appraisal as a result of poor maintenance or depreciation.
Yes. Dog bite claims can be quite expensive, and some insurers choose not to provide insurance to homeowners who own a breed with a history that suggests a dog bite claim is more likely.
If homeowners coverage is in force and the policy does not have a specific exclusion, the company cannot deny coverage based on dog breed.
No. Homeowner policies do not cover damage caused by earth movement. Earthquake coverage is available for an additional premium. Even though there is specialty coverage available for landslides, it is expensive and difficult to find.
No, homeowner policies do not typically cover motor vehicles. Most insurance companies will write coverage for a classic car, but a specialty collector auto policy can offer specialized coverage suited to a collector’s needs.
Create a home inventory
After a major loss your insurer will ask for a detailed list of personal property items. Creating a list of all of your belongings from memory would be difficult at any time. Creating a list when you’re dealing with a tragedy is nearly impossible.
You should create an inventory of your possessions every year.
Mobile apps can make creating your home inventory easier. Download mobile apps to start building your personal property list.
Here is a link to Apple Store® for Home Inventory
Here is a link for the Google Play®, search for "Home Inventory"