Homeowners Insurance Archives

Homeowners Insurance Coverage Tips

April 10, 2023 By cary

Courtesy of iii.org

For many people, their home is their greatest asset, so it is crucial to avoid being underinsured. To properly insure your home, it is important to ask your insurance professional four key questions.

1. Do I have enough insurance to rebuild my home?

Your policy needs to cover the cost of rebuilding your home at current construction costs. Unfortunately, some homeowners simply purchase enough insurance protection to satisfy their mortgage lender. Others confuse the real estate value of their home with what it would cost to rebuild it. Quite simply, you should have enough insurance to rebuild your home in the event that it is completely destroyed. Be sure to consider the following:

Replacement cost – Most policies cover replacement cost for damage to the structure. A replacement cost policy pays for the repair or replacement of damaged property with materials of similar kind and quality.
Extended replacement cost – This type of policy provides additional insurance coverage of 20 percent or more over the limits in your policy, which can be critical if there is a widespread disaster that pushes up the cost of building materials and labor.
Inflation guard – This coverage automatically adjusts the rebuilding costs of your home to reflect changes in construction costs. Find out if your policy includes this coverage or if you have to purchase it separately.
Ordinance or law coverage – If your home is badly damaged, you may be required to rebuild it to meet new (and often stricter) building codes. Ordinance or law coverage pays a specific amount toward these costs.
Water back-up – This coverage insures your property for damage from sewer or drain back-up. Most insurers offer it as an add-on to a standard policy.
Flood insurance – Standard home insurance policies provide coverage for disasters such as fire, lightning and hurricanes. They do not include coverage for flood (including flooding from a hurricane). Flood insurance is available through the federal government’s National Flood Insurance Program (www.floodsmart.gov), but can be purchased from the same agent or company representative who provides you with your home or renters insurance. Make sure to purchase flood insurance for the structure of your house, as well as for the contents. Excess Flood Protection, which provides higher limits of coverage than the NFIP in the event of catastrophic loss by flooding, is available from some insurers. Keep in mind that there is a 30-day waiting period before the insurance is valid.

2. Do I have enough insurance to replace all of my possessions?

Most homeowners insurance policies provide coverage for your personal possessions for approximately 50 percent to 70 percent of the amount of insurance you have on the structure of your home. So if you have $100,000 worth of coverage on the structure of your home, you would be covered for $50,000 to $70,000 worth of the contents of your home, depending on the policy.

The best way to determine if this is enough coverage is to conduct a home inventory, which details everything you own and the estimated cost to replace these items if they are stolen or destroyed by a disaster. Keep your home inventory in a safe place if you have physical copies; or store it in the Cloud if you are using a home inventory app.

You can insure your possessions in two ways: by their actual cash value or their replacement cost. Make sure you review with your insurance pofessional which type of coverage is best for your particular situation.

Actual cash value policy This coverage pays the cost of replacing your belongings minus depreciation.
Replacement cost policy This coverage reimburses you for the full current cost of replacing your belongings.

To illustrate the difference between the two types of policies, suppose, for example, a fire destroys a 10-year-old television set in your living room. If you have a replacement cost policy for the contents of your home, the insurance company will pay to replace the TV with a comparable new one. If you have an actual cash value policy, it will pay only a small percentage of the cost of a new TV set because the old TV has been used for 10 years and is now worth a lot less than its original cost. Some replacement cost policies specify that the new item be purchased by the insurance company as they may be able to purchase at a bulk or special rate. The price of replacement cost coverage is about 10 percent more than that of actual cash value.

3. Do I have enough coverage for additional living expenses?

Coverage for additional living expenses pays the extra costs of temporarily living away from your home if you can’t live in it due to an insured disaster such as a hurricane. It covers hotel bills, restaurant meals, transportation and other living expenses incurred while your home is inaccessible or being rebuilt. It is important to note that it covers only those expenses that are over and above your regular living expenses, so it would not cover your mortgage, or regular trips to the grocery store. If you rent out part of your house, this coverage also reimburses you for the rent that you would have collected from your tenant if your home had not been destroyed.

Coverage for additional living expenses differs from company to company. Many policies provide coverage for about 20 percent of the insurance on your house. Some companies will sell you a policy that provides you with an unlimited amount of loss of use coverage, for a limited amount of time.

Make sure you know exactly how much coverage you have for additional living expenses, and whether there is a time limit. If the standard coverage is not adequate, it can generally be increased for an additional premium.

4. Do I have enough insurance to protect my assets?

Although not a key element in disaster planning, it is also important to have adequate liability protection. This covers you against lawsuits for bodily injury or property damage that you or your family members may cause to other people. It also pays for damage caused by pets. Liability insurance pays for both the cost of defending you in court and for any damages a court rules you must pay—up to the limits of your policy. Most homeowners insurance policies provide a minimum of $100,000 worth of liability insurance, but higher amounts are available.

It is important to purchase enough liability insurance to protect your assets. If the standard liability coverage in your homeowners policy is not sufficient, you may need an excess liability, or umbrella, policy, which provides additional coverage over and above what is covered in your home (and auto) insurance policy.

Grilling Safety & Insurance

June 23, 2019 By Anna Brantley

Courtesy of
https://www.iii.org/article/8-auto-insurance-myths

Millions of Americans safely enjoy outdoor barbecues, but accidents do happen. Ensure trouble-free summer cooking fun by maintaining your grill, using it safely and knowing what to do in case of emergency.

Hot to handle

According to the U.S. Fire Administration, about 5,700 grill fires take place on residential property every year, most caused by malfunctioning gas grills. These fires cause an annual average of $37 million in damage, 100 injuries and 10 fatalities. In addition, thousands more people visit emergency rooms every year because they have burned themselves while barbecuing.

In the rare instance of a grill fire spreading to your property, your homeowners insurance provides financial protection, as fire is a covered peril. A standard policy covers:

Damage to the house itself
Damage to personal possessions, such as lawn furniture
Damage to insured structures on your property, such as a shed or gazebo
Injuries to a guest, under the liability portion of the policy

Of course, the best way to enjoy a summer of outdoor barbecues is to take steps to prevent accidents, and take fast action should any occur.

Properly maintain and store your grill

Gas grills are generally safe if they are properly designed and constructed, properly maintained and regularly checked for leaks. Follow these safety tips when setting up at the start of each grilling season:

Search the Consumer Product Safety Commission website to make sure there has not been a recall on your model grill.
Check grill hoses for cracks, holes and brittleness.
Check for blockages, especially in the Venturi tube that runs to the burners. These can be caused by food drippings, spiders or insects. Clear any blockages with a wire or pipe cleaner.
Check for leaks by running a solution of one part liquid soap, one part water along hoses and on connections. Open the valve at your tank and check to make sure that gas isn’t escaping, which will be indicated by bubbles at the leaking points.
Adjust hoses away from hot areas or where grease might drip on them.
Cover your grill when cooled and not in use to help protect its parts from inclement weather, falling leaves, and insect activity.
Store propane tanks outside, away from your house. Always check to make sure valves are firmly turned off.

Practice safe barbeque habits

When barbecuing, use common sense:

Operate your barbecue on a level surface, away from your house, garage and landscaping.
Keep a fire extinguisher nearby and let everyone know where it is and how to operate it.
Don’t move the grill once it is lit.
Keep children and pets away from the grill.
Protect yourself—or whoever is doing the grilling—with a heavy apron and oven mitts that reach high on the forearm. Use very long-handled utensils designed for barbecuing.
Use only lighter fluid designed for grilling when charcoal grilling. Never use gasoline or other flammable liquids, and never add more lighter fluid once the fire has started.
Never grill indoors or in enclosed areas. Charcoal grills produce carbon monoxide (CO) fumes, which can be fatal in unventilated areas.
Wait until the grill is cooled before storing or covering. When you’re done cooking, remember that the grill will remain hot for a while.
Soak charcoal briquettes with water to ensure they are cool and inactive before throwing them away.

Know what to do in case of an accident

Despite all good efforts to prevent them, accidents do happen. Which is why they’re called accidents—and why people have insurance! Here are steps to take if the worst should happen:

In case of fire get out the trusty fire extinguisher and, if the situation warrants, call 911. Fire spreads quickly and it’s better to be safe with professional help than sorry.
Address injuries immediately. Run cool water over minor burns, but do not cover injured areas with bandages, butter or salve. In the case of serious burns, take victims to the emergency room or an urgent care facility. Again, if needed or when in doubt, call 911.
Assess your property damage. Once you have dealt with any injuries and the smoke clears, assess your property damage. If the situation calls for it, contact your insurance professional to discuss filing a claim.

Renting From Your Peers

March 18, 2019 By Anna Brantley

Courtesy of iii.org

Before you consider renting out your home, your guest room—or even your couch—first contact your insurance professional so you fully understand the financial risks and can take the proper precautions. Here’s some general information to jumpstart your insurance conversation.

If you are considering renting out your home, your guest room or even your couch your first step should be to contact your insurance professional. Peer-to-peer home sharing opportunities such as Airbnb can be a great way to bring in extra money and are increasingly popular; however, they can also leave you financially vulnerable. If your renter starts a fire and damages your property or is hurt while renting your home, will you be protected?

Peer-to-peer home rental

Peer-to-peer home sharing opportunities such as Airbnb are increasingly popular and can be a great way to bring in extra money. However, they can also leave you financially vulnerable. If your renter starts a fire and damages your property or is hurt while renting your home, will you be protected?

Standard homeowners and renters insurance policies are designed for personal risks, not commercial risks. Some insurers now offer a home-sharing liability insurance policy that can be purchased on a month-to-month basis, but there may be exclusions and limitations, so read the policy carefully. If you plan to rent out all or part of your home on a regular basis, many companies will consider this a business use and you may need to purchase a business policy—specifically either a hotel or a bed-and-breakfast policy.

If you are doing the renting

If you are the one using a peer-to-peer network to rent a space from someone else, check your own homeowners or renters insurance policy. In most cases, if your personal possessions are stolen or damaged off-premises, you can simply file a claim with your own insurer. And if you accidentally injure someone, you should also be financially protected.

Occasional home rental

There may be times when a major event in an area—the Super Bowl, say, or a graduation at a major university—depletes local hotel space. In these cases, it’s fairly common for people to rent out their home or part of it for the extra cash it brings in.

Many insurance companies take this situation into account when creating a homeowners or renters policy and, with sufficient advance notice, will extend your coverage to the renter on a one-time basis. Other insurance companies may require the purchase of an endorsement to the policy to provide broader coverage for the renters in your home.

In both cases, be sure to let your insurance company know ahead of time, so you can be prepared.

Understanding Homeowners Insurance Coverage

October 21, 2018 By Anna Brantley

Courtesy of iii.org

Homeowners coverage provides financial protection against loss due to disasters, theft and accidents. Most standard policies include four essential types of coverage: Coverage for the structure of your home; Coverage for your personal belongings; Liability protection; Coverage for Additional Living Expenses

Coverage for the structure of your home

Your homeowners policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disasters listed in your policy. Most policies also cover detached structures such as a garage, tool shed or gazebo—generally for about 10 percent of the amount of insurance you have on the structure of the house.

A standard policy will not pay for damage caused by a flood, earthquake or routine wear and tear.

When purchasing coverage for the structure of your home, remember this simple guideline: Purchase enough coverage to rebuild your home.

Coverage for your personal belongings

Your furniture, clothes, sports equipment and other personal items are covered if they are stolen or destroyed by fire, hurricane or other insured disasters. The coverage is generally 50 to 70 percent of the insurance you have on the structure of the house.

The best way to determine if this is enough coverage is to conduct a home inventory.

Personal belongings coverage includes items stored off-premises—this means you are covered anywhere in the world. Some companies limit the amount to 10 percent of the amount of insurance you have for your possessions. You also have up to $500 of coverage for unauthorized use of your credit cards.

Expensive items like jewelry, furs, art, collectibles and silverware are covered, but there are usually dollar limits if they are stolen. To insure these items to their full value, purchase a special personal property endorsement or floater and insure the item for its officially appraised value.

Trees, plants and shrubs are also covered under standard homeowners insurance—generally for about $500 per item. Trees and plants are not covered for disease, or if they have been poorly maintained.

Liability protection

Liability covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by your pets. So, if your son, daughter (or even your dog) accidentally ruins a neighbor’s expensive rug, you are covered. (However, if they destroy your rug, you’re out of luck.)

The liability portion of your policy pays for both the cost of defending you in court and any court awards—up to the limit stated in your policy documents.

Liability limits generally start at about $100,000, however, it’s a good idea to discuss whether you should purchase a higher level of protection with your insurance professional. If you have significant assets and want more coverage than is available under your homeowners policy, consider purchasing an umbrella or excess liability policy, which provides broader coverage and higher liability limits.

Your policy also provides no-fault medical coverage, so if a friend or neighbor is injured in your home, he or she can simply submit medical bills to your insurance company. This way, expenses can be paid without a liability claim being filed against you. It does not, however, pay the medical bills for your own family or your pet.

Additional living expenses (ALE)

ALE pays the additional costs of living away from home if you cannot live there due to damage from a an insured disaster. It covers hotel bills, restaurant meals and other costs, over and above your usual living expenses, incurred while your home is being rebuilt.

Keep in mind that the ALE coverage in your homeowners policy has limits—and some policies include a time limitation. However, these limits are separate from the amount available to rebuild or repair your home. Even if you use up your ALE your insurance company will still pay the full cost of rebuilding your home up to the policy limit.

If you rent out part of your house, ALE also covers you for the rent that you would have collected from your tenant if your home had not been destroyed.

Next steps: Purchasing a home? Get the Home Buyers Insurance Checklist.

Should I Insure Household Help

April 29, 2018 By Anna Brantley

Courtesy of iii.org

Accidents happen—and if they happen to people you’ve hired to come into your home or onto your property to work, you’re financially liable. It makes sense to understand how you’re already covered and when to further insure household help.

Appropriate and adequate insurance coverage depends on the nature of the employee’s position and the assets you’re protecting. As always, consult your insurance professional with any questions or requested changes to your policy. Here’s some information to get you started.

If you contract a worker with an outside firm

For many household and in-home care needs—for example, for a nurse, a physical therapist, a cook or a housekeeper—you may decide to contract with a business or agency that provides these types of pros.

Determine who is the employer. When you’re dealing with a firm or agency, in most cases the worker you hired is an employee of that business and insured under their auspices. (If for some reason you’re the employer, read on to the situations below and talk to your insurance professional.)

Ask the firm for a copy of its certificates of insurance, which provides documentation that the firm provides workers compensation for its employees. If the firm also offers health and disability insurance, you can feel comfortable that any worker injured on your property will receive medical treatment.

If you hire occasional workers

If you occasionally hire a babysitter to take care of your children or a young person in your neighborhood to rake leaves or clean the garage, review your current insurance and:

Learn about the current no-fault medical coverage in your homeowners policy or renters insurance. If someone other than an immediate family member is injured on your property, you can submit their medical bills directly to your insurance company for reimbursement. Make sure your policy limits are adequate to your needs.

Check your liability insurance. Depending on your current homeowners and renters coverage and your assets, you may elect to raise the amount or buy more coverage through an umbrella liability policy.

If you hire permanent full- or part-time employees

If you hire one or more home workers on a permanent, regularly scheduled basis, consider purchasing workers compensation insurance. Workers comp provides coverage for medical care and physical rehabilitation for an employee who is injured on the job, as well as lost wages if the employee is severely hurt and no longer able to work. In the worst-case scenario, it also provides death benefits.

Find out if your state requires workers compensation for the type of employees you’re hiring (ex. housekeeper, gardener, etc.). Your state workers compensation board or agency can provide this information.

Determine the mandatory requirements workers comp coverage. For instance, some states may require an employer who hires a certain number of employees to buy workers compensation. In other states, the determination might be based on the number of hours an employee would work.

Don’t ignore the law. It’s important to note that if you’re required by law to buy workers compensation insurance and you fail to do so, your homeowners or other applicable policies will not pay for any fines, court awards or any other penalties against you.

If your employee is going to drive your car

Whatever the nature of the employee relationship, it’s important to inform your auto insurance company if the person you hire is going to drive your car. For example, if you’re going to lend your car to a worker to pick up groceries or take an aging parent to the doctor, your insurer needs to know about the additional driver for auto insurance purposes. Whatever the employee car usage, your insurer can explain your options.

Next steps link: Do you anticipate lots of workers because you’re renovating? Know the insurance implications of remodeling your home.