The best home insurance coverage consists of buying the right type of policy, which can be found when you compare home insurance quotes, having the proper levels of protection within that policy including special provisions for jewelry, your computer stuff, and other particularly valuable possessions and supplementing this coverage with special protection against natural disasters that are not covered in your basic policy. Homeowners with mortgages are required by their lenders to have home insurance. A. J. Longo and Associates will work with you and find coverage that meets your unique needs.
The 3 Basic Home Insurance Policies
HO-1. Basic homeowner stuff. Home insurance quotes of this type cover your dwelling and personal property against losses from 11 types of perils: fire or lightning; windstorm or hail; explosion; riot or civil commotion; aircraft; vehicles; smoke; vandalism or malicious mischief; theft; damage by glass or safety glazing material that is part of a building; and, volcanic eruption.
HO-2. Basic homeowner stuff plus some. Covers dwelling and personal property against 11 perils plus six more: falling objects; weight of ice, snow or sleet; three categories of water-related damage from home utilities or appliances; and electrical surge damage.
HO-3. Extended or special homeowner stuff. One of the best home insurance, this covers 17 stated perils plus any other peril not specified in your policy, except for flood, earthquake, war, and nuclear accident.
Dwelling coverage (Coverage A) is the portion of your home insurance policy that covers the cost of rebuilding /repairing your home in the event that it is damaged or lost in a covered peril such as wind, hail, lightening or fire. Separate policies are needed for damages and losses caused by earthquake and flood insurance as these are not covered under standard home insurance policies.
The amount of dwelling coverage that you should purchase should be enough to cover the cost of rebuilding your home in the event of a complete loss. Do not confuse this amount with the market value of your home, as the market value includes the value of your land. Remember that in the event of a disaster, your land will not be lost, only the buildings that stand on it.
Other Structures Coverage (Coverage B) is the portion of your home insurance policy that covers the cost of rebuilding/repairing the additional structures on your property other than your home. This includes detached garages, sheds, and other detached buildings on your property that may be damaged by a covered peril.
Typically, a standard home insurance policy will provide 10% of the total dwelling coverage as coverage for additional structures. For example, if you have $100,000 worth of coverage for the structure of your home, your policy would include $10,000 of coverage for other structures.
If you think you may need additional coverage above and beyond the standard 10%, talk to a home insurance agent about scheduling an endorsement on your policy.
Contents Coverage (or Coverage C) is the portion of your home insurance policy that covers the cost of replacing your possessions, or home’s contents, in the event that they are destroyed in a covered peril (wind, fire, hail, lightening, theft, etc).
How much do I need?
Typically a home insurance policy will provide 50%-70% of your dwelling coverage towards contents/personal belonging coverage. However, you might decide to purchase more depending on the value of the personal belongings in your home. The best way to know how much contents coverage you need is to perform a home inventory. A home inventory is a list of all your personal possessions with a compilation of photos, receipts, and any other proof of ownership you may have. A home inventory serves two important functions. First, it allows you to calculate the value of your possessions to ensure you are purchasing an adequate amount of contents coverage. Secondly, it will be your greatest asset in the event of a disaster when you need to prove to your home insurance company that you owned that flat screen TV and $3,000 leather couch, for example. And remember- always keep your home inventory in a safe or at a friend’s house so it is not ruined in a fire or other natural disaster.
What if I need additional coverage for a specific item?
Every policy will have limits as to how much it will pay for each type of property. For example, most standard home insurance policies will only pay $1500 for jewelry lost in theft. Oftentimes a customer will have one particular item that is expensive, and they feel they need more coverage than what is included in their policy. At this point it is recommended that you add a scheduled endorsement onto your policy for that item. A customer, for example, with a necklace worth $10,000 would schedule the necklace on their policy and take out additional coverage to protect that item.
If you think you may need additional coverage talk to a home insurance agent about scheduling an endorsement on your policy.
Loss of Use (or Coverage D) is the portion of a standard home insurance policy that protects you in the event that your home is destroyed or damaged and you must seek other living arrangements while repairs are made. Loss of use coverage reimburses you for hotel, restaurant and other living expenses you may incur as a result of your home being uninhabitable. The purpose of this coverage is to help you maintain your standard of living in the event of a disaster.
Most standard home insurance policies will provide coverage up to 20% of the dwelling coverage. Meaning, if you have $100,000 worth of dwelling coverage, your loss of use coverage would be approximately $20,000. Talk to your home insurance agent for specific coverage information on your policy.
Personal Liability Insurance (Coverage E) is the section of a standard home insurance policy that protects you or covered family members against lawsuits. This type of insurance coverage would protect you in the various examples of situations where a lawsuit is presented:
- Your mailman falls on your porch steps because of a faulty railing
- Your dog bites a neighbor
Standard home insurance policies will typically include a minimum of $300,000 for each liability claim occurrence. Some common exclusions of this policy include lawsuits involving the transmission of a communicable disease, mental/physical/sexual abuse, or anything involving the sale, manufacture or distribution of a controlled substance.
Some homeowners choose to take out an extension of this coverage if they feel they need to further protect themselves against liability lawsuits. One common reason for taking out an extension of liability coverage would be a homeowner who owns a swimming pool. Another type of liability coverage is Personal Injury Liability or an Umbrella Liability Policy which protects the insured against lawsuits involving libel, slander, defamation of character, false arrest, detention, imprisonment or malicious prosecution, invasion of privacy and wrongful eviction or wrongful entry. This policy can also cover liability protection for auto accidents with the minimum underlying auto limits.
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.
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 costs
(*There are exclusions to each umbrella liability policy which should be discussed with your home insurance agent.)
Condo insurance is specifically designed to provide coverage for condominium owners.
Unlike the owner of a single-family home, a single-unit condominium owner does not need coverage for the entire building, instead, just their unit. (Typically, condo owners are also required to pay into a Master Policy as well that covers common areas of the building- but more on this below.)
Condo insurance typically includes the following protection in the event of a covered claim:
- 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 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. However, there are typically limits for each item 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 a lawsuit where they, or an immediate family member who also lives in the condo, are being sued for bodily harm or property damage they have caused. Most policies typically carry a minimum of $100,000 in personal liability coverage, 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 coverage options. Most condo policies have medical payments coverage of up to $2,000 per 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.
Flood damage to your home and personal property is NOT covered by standard homeowners’ insurance policies.
However, most insurance companies can offer you a separate flood insurance policy which is underwritten by the National Flood Insurance Program. The policy is also accessible from the National Flood Insurance Program, http://www.floodsmart.gov.
Homeowners located within a standard Flood Zone (A, AE, V, etc.), are typically required by their lenders to obtain flood insurance. What many homeowners outside of a standard Flood Zone (A, AE, V, etc.) may not realize, is that while a lender may not require flood insurance, it is always a smart investment to protect your home against flood damage. According to the Federal Emergency Management Agency (FEMA), 25-30 percent of all losses occur in low to moderate risk zones. Most homeowners who purchase flood insurance in the low to moderate risk zones are eligible for lower rates.
Flood Insurance typically covers the cost to replace your home, however it only covers the actual cash value for coverage of your possessions. Actual cash value refers to the value of the possessions to replace them minus the depreciation value.
Even if not required by your lender, we recommend obtaining flood insurance especially if your home has the potential to be flooded by a nearby river, lake, or melting snow.