Homeowners Insurance

A home can be your most valuable asset. Protecting it should be just as important.

Taking a few minutes to think about the kind of homeowners insurance you need could save you tons of time and potentially thousands of dollars down the road.

Your home may be be your most expensive life purchase. Therefore, it’s a great idea for your homeowner’s policy to reflect your investment.

LIABILITY

Liability covers you against lawsuits for bodily injury or property damage that you or family members negligently cause to other people. It may also pay for damage caused by your pets. So, if your son, daughter, or dog accidentally ruins your neighbor’s expensive rug, you are covered. However, if they destroy your rug, you are not covered.

The liability portion of your policy pays for both the cost of defending you in court and any court awards—up to the limit of your policy. You are also covered not just in your home, but anywhere in the world.

Liability limits generally start at about $100,000. However, we recommend that you purchase at least $500,000 worth of protection. Some people feel more comfortable with even more coverage. You can purchase an umbrella or excess liability policy which provides broader coverage, including claims against you for libel and slander, as well as higher liability limits.

Your policy also provides no-fault medical coverage. In the event a friend or neighbor is injured in your home, he or she can submit medical bills to your insurance company. This way, expenses are paid without a liability claim being filed against you. You can generally get $1,000 to $5,000 worth of this coverage. It does not, however, pay the medical bills for your family or your pet.

PERSONAL BELONGINGS/CONTENT

Your furniture, clothes, sports equipment, and other personal items are covered if they are stolen or destroyed by fire, hurricane, or other insured disasters. Most companies provide coverage for 50% to 70% of the amount of insurance you have on the structure of your home. So if you have $100,000 worth of insurance on the structure of your home, you would have between $50,000 to $70,000 worth of coverage for your belongings. The best way to determine if this is enough coverage is to conduct a home inventory. “Know your stuff” free home inventory software

This part of your policy includes off-premises coverage. This means that your belongings are covered anywhere in the world, unless you have decided against off-premises coverage. Some companies limit the amount to 10% of the amount of insurance you have for your possessions. You have up to $500 of coverage for unauthorized use of your credit cards.

Expensive items like jewelry, furs, firearms, fine arts and silverware are covered, but there are usually dollar limits if they are stolen. Generally, you are covered for between $1,000 to $2,000 for all of your jewelry and furs. To insure these items to their full value, purchase a special personal property endorsement or floater and insure the item for its appraised value. Coverage includes “accidental disappearance,” meaning coverage if you simply lose that item. And there is no deductible.

Trees, plants, and shrubs are also covered under standard homeowners insurance. Generally you are covered for 5% of the insurance on the house—up to about $500 per item. Perils covered are theft, fire, lightning, explosion, vandalism, riot, and even falling aircraft. They are not covered for damage by wind or disease.

SPECIAL PROPERTY

The typical homeowners policy offers plenty of coverage for personal property, usually offering a limit equal to half of the amount reserved for the residence (ex. your home is covered for $150,000, so your contents and furnishings are covered for $75,000). While this is generous coverage, it doesn’t extend to all types of property for all causes of loss. Certain types of property, because of its high value and liquidity, is far more vulnerable to loss either easily destroyed, easily stolen or both. For instance, an insurer protects your sofa right along with your fur coat for the same basic premium, but the two types of property don’t represent the same chance loss. Recognizing this fact, insurers put more restrictions on the coverage provided by a basic policy.

Theft Coverage Limitations

When property is lost due to theft, coverage under a standard homeowner policy is severely limited (generally between $1,000–$2,500) for the following types of property:

Jewelry, watches, furs, and gemstones
Dinnerware, serving sets, trophies, and similar property made of or plated with silver, gold, platinum, or pewter
For firearms, accessories, and related property
Fine Arts: Paintings, artwork, sculptures and collectibles

Other Coverage Limitations

Several categories of property are subject to very modest limits (generally between $200–$2,500) of coverage, regardless of the cause of loss (theft, fire, accidental breakage, etc). Specifically:

Money, bank notes, coins, medals, gold, silver, and platinum (other than jewelry or dinnerware)
Securities, accounts, deeds, tickets, stamps, manuscripts, passports, and similar property
Watercraft and related property including their trailers
Trailers not used with watercraft
Business property located in your residence
Business property located away from your residence
Certain types of electronic property (CD players, VCRs, TVs, radios, computers, and related accessories) which is lost or damaged while in a car or is located away from your home and used for business

How do you handle the limited coverage situation?

You have to do something extra to your insurance program. Limited coverage can be handled using the following methods:

Increased Coverage C Endorsement – This form is only appropriate for property saddled with limited coverage for theft losses. This form is attached to a basic policy, and it increases the theft insurance limit (i.e., for jewelry from $1,500 to $5,000).

Scheduled Personal Property Endorsement – This form is used for increasing coverage for property that has protection reduced for all sources of loss. The property is removed from the basic policy’s limits and is covered exclusively by the endorsement. This form is more detailed since each item of property has to be listed and assigned a particular insurance limit.

Inland Marine Property Floater – This method works like the personal property endorsement, except that it is a separate policy. This alternative is more appropriate for persons owning substantial amounts of high-valued property. In order to qualify for such coverage, you may need to meet special circumstances such as having a residential alarm system or make use of vault storage.

Another advantage of special handling

In order to arrange coverage under a schedule or an inland marine policy, the property must be properly valued. This often involves appraising the property. It’s very helpful to have an expert source establish the current value of jewelry, furs or other valuable possessions. In fact, such property should be appraised every two or three years since their values often increase over time.

HOUSE STRUCTURE/DWELLING

This part of your policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning, or other disaster listed in your policy. It will not pay for damage caused by a flood, earthquake, or routine wear and tear. When purchasing coverage for the structure of your home, it is important to buy enough to rebuild your home for replacement cost.

Most standard policies also cover structures that are detached from your home such as a garage, tool shed, or gazebo. Generally, these structures are covered for about 10% of the amount of insurance you have on the structure of your home. If you need more coverage, talk to your insurance agent about purchasing more insurance.

HOMEOWNERS SAFETY

In the event of a sudden emergency such as a fire, tornado or other disaster, you may have just minutes to gather your family and important papers and get out of your house, possibly for good. With preparation and practice, you stand the best chance of getting out with what you and your family need and ending up in a safe place.

The first order of business is to assess your evacuation preparedness by doing a real-time test. Give yourself just 10 minutes to get your family and belongings into the car. By planning ahead and practicing, you should be able to gather your family members and pets, along with the most important items they will need, calmly and efficiently, with a minimum of stress and confusion.

The Insurance Information Institute (www.iii.org) suggests the following four steps to help you and your family on the road to safety.

Create a Home Inventory

Create a complete home inventory of your personal property. A home inventory will help ensure that you have purchased enough insurance to replace your possessions. It can also speed the claims process, and substantiate losses for income tax purposes.

To make creating a home inventory easier, the I.I.I. provides free online software at KnowYourStuff.org. The software allows you to inventory your home room by room, and prompts you to enter important information such as the make, model and place of purchase of each item. You can also upload and store related documents, such as photos, receipts and appraisal forms.

Once your inventory complete, you can store it using your online account, which will allow you to access it from anywhere at any time in the event your home and/or computer is destroyed.

Plan What to Take

You may be forced from your home for several days or even weeks. Be sure to take essential items such as medicines as well as “comfort items” such as your children’s favorite toys or books. In the event of an evacuation, have the following items prepared to take with you:

Medicines, prescriptions and a first aid kit
Bottled Water
Clothing and bedding (sleeping bags, pillows)
Flashlight, battery-powered radio and extra batteries
Special items for infants or elderly or disabled family members
Computer hard drive or laptop
Photographs
Pet food and other items for pets (litter boxes, leashes)
Gather Important Documents

Keep important documents in a safe place that you can access easily. In the event of an evacuation take the following documents with you:

Insurance policies
Prescriptions
Birth and marriage certificates
assports
Drivers license or personal identification
Social Security Cards
Recent tax returns
Employment information
Wills, deeds and recent tax returns
Stocks, bonds and other negotiable certificates
Bank, savings and retirement account numbers
Home inventory
Arrange Your Evacuation Ahead of Time

Identify where you can go in the event of an evacuation. Try to have more than one option: the home of a friend or family member in another town; a hotel or a shelter. Keep the phone numbers and addresses of these locations handy.
Map out your primary route and a backup route in case roads are blocked or impassable. Make sure you have a map of the area available.

In case your family members are separated before or during the evacuation, identify a specific place to meet and ask an out-of-town friend or family member to act as a contact person.

Dogs

According to the Centers for Disease Control and Prevention, more than 4.7 million people are bitten by dogs annually, resulting in an estimated 800,000 injuries that require medical attention. With over 50 percent of the bites occurring on the dog owner’s property, the issue is a major source of concern for insurers.

Over the years, many states have passed laws with stiff penalties for owners of dogs that cause serious injuries or deaths. In about one-third of states, owners are “strictly liable” for their dogs’ behavior, while in the rest of the country they are liable only if they knew or should have known their dogs had a propensity to bite (known as the “one free bite” principle).

Dog bites account for more than one-third of all homeowners insurance liability claims, costing $412 million in 2009, up 6.40 percent from 2008, according to the Insurance Information Institute (I.I.I.). An analysis of homeowners insurance data by the Insurance Information Institute found that the average cost of dog bite claims was $24,840 in 2009, up slightly from $24,461 in 2008. Since 2003 the cost of these claims has risen nearly 30 percent. Additionally, the number of claims has increased 4.8 percent to 16,586 in 2009 from 15,823 in 2008. Insurers generally oppose legislation that would require changes to their dog breed practices. They contend that government public health studies and the industry’s claims histories show that some breeds are more dangerous than others and are higher loss risks.

Kerosene Heater Safety

If you use a kerosene heater in your home or place of business, you should take precautions against a number of serious hazards.

These dangers include:

Fire or explosion. Fire could be caused by operating the heater too close to furniture, draperies or other combustibles, by knocking over a lighted heater, or by accidentally igniting fuel when filling the tank. Explosions could be caused by use of the wrong kind of fuel, or by operating the heater in an area where there are combustible fumes.

Burns. Burns could be caused by direct contact with a heater, or by ignition of combustible clothing. Children especially should be kept at a safe distance from operating heaters. Even pets could be injured.

Asphyxiation. Kerosene heaters consume oxygen as they burn. If they are operated in a small room or in an inadequately ventilated area, oxygen in the air could be reduced to a dangerous level. Reduced oxygen supply could lead to incomplete combustion of fuel and the production of carbon monoxide. Carbon monoxide is a colorless, odorless gas which in sufficient concentrations, or if breathed over a period of time, can kill without warning.

Indoor air pollution. In addition to carbon monoxide, kerosene heaters can emit such pollutants as carbon dioxide, nitrogen dioxide and sulphur dioxide. Breathing these substances can create a risk, especially to such people as pregnant women, asthmatics, individuals with cardiovascular disease, elderly persons and young children.

These hazards can be minimized or averted by carefully following manufacturers’ instructions for use of kerosene heaters, and by adopting other common-sense safety measures.

Pool Safety

Whether you have a luxury in-ground pool, or plan to blow up an inflatable kiddie pool, it is important to consider the safety implications.

There are an estimated 7.4 million swimming pools and five million hot tubs in residential or public use in the United States, according to the Centers for Disease Control and Prevention (CDC). Furthermore, there are over 3,400 fatal unintentional drownings in the United States each year, with more than one out of five drowning victims being a child 14 years old or younger, according to the CDC. If you have a pool, the Insurance Information Institute (www.iii.org) commends taking the following safety precautions:

Install a four-sided barrier such as a fence with self closing gates to completely surround the pool. If the house forms the fourth side of the barrier, install alarms on doors leading to the pool area to prevent children from wandering into the pool or spa unsupervised. In addition to the fences or other barriers required by many towns, consider creating several “layers of protection” around the pool, in other words setting up as many barriers (door alarms, locks and safety covers) as possible to the pool area when not in use.

Never leave small children unsupervised—even for a few seconds. And never leave toys or floats in the pool when not in use as they may prove to be a deadly temptation for toddlers trying to reach them who might then fall into the pool.

Keep children away from pool filters and other mechanical devices as the suction force may injure them or prevent them from surfacing. In case of an emergency, know how to shut off these devices and clearly post this information so others can do so too.

Ask if pool users know how to swim. Learners should be accompanied by a good swimmer. If you have children, have them take swimming lessons as early as possible. And, do not allow anyone to swim alone.

Check the pool area regularly for glass bottles, toys or other potential accident hazards. Also, keep CD players, radios and other electrical devices away from pools or nearby wet surfaces.

Limit alcohol use around the pool, as drinking alcoholic beverages negatively impacts balance, coordination and judgment—and its effects are further heightened by sun exposure and heat. The CDC reports that alcohol use is involved in up to half of adolescent and adult deaths associated with water recreation.
Clearly post emergency numbers on the phone, in the event of an accident. Keep a first aid kit, ring buoys and reaching poles near the pool. You may also want to consider learning basic water rescue skills, including first aid and CPR training. For additional information, contact the American Red Cross.

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More Home Insurance Links

Homeowners

Your home may be be your most expensive life purchase. Therefore, it’s a great idea for your homeowner’s policy to reflect your investment.

Rental Property

Rental property covered under personal insurance is habitational property owned by an individual, not a corporation, partnership or LLC, and rented to individuals. The structure may consist of up to four units and the owner may occupy one of the units in a multiunit structure.

Condo Owners

Condominium or cooperative unit owners own only the inside of their units. The outside of their units are owned by the condominium association or the cooperative. All insurance-related issues must be evaluated based on the condominium or cooperative bylaws.

Vacant Dwelling

In order to have all of the coverage your typical home policy covers, you must purchase a vacant home policy. There are additional underwriting criteria for these policies and generally they require that you keep the utilities on, lawn maintained and someone must inspect the property on a regular basis.

Beyond Insurance.

Frequently people go for years without reviewing their insurance program, even though life quickly changes. By answering a few questions, you can have the peace of mind knowing that your family and possessions are protected.