Home Insurance Coverage

What are several ways you can suffer financial loss when you own a home?

When you own a home, you can suffer financial losses in several ways…

A storm could damage your house and a thief could steal it’s contents. A

neighbor could slip on your front porch, sustain an injury, and sue you.

Fortunately, you can buy insurance to protect yourself from all of these

financial losses.

Provides personal property and liability protection for your home.

Homeowner’s Insurance

The personal property portion of homeowner’s insurance covers damage to or loss of your house and its contents.

It covers:◦ Physical structure◦ Unattached structures

Separate garages or storage sheds

PERSONAL PROPERTY

Also covers things in the interior of your home◦ Furniture◦ Appliances◦ Curtains◦ Clothes

◦ MIGHT even cover personal property stolen from your car and living expenses during a repair if your house is uninhabitable after a loss.

PERSONAL PROPERTY

Some items are specifically excluded or are not covered for their full value.

◦ Coin or other collections◦ Laptop Computers◦ Silverware◦ Valuable Jewelry◦ Cash

◦ You may have to purchase RIDERS to cover these items.

EXCLUSIONS

The liability portion of your homeowner’s policy covers bodily injury or damage you cause to others while on your property or in other locations.

◦ For example, suppose you have been working on your roof. You leave the ladder up against the house while you go in for lunch. The child next door climbs the ladder and he falls, injuring himself.

◦ Your homeowner’s liability coverage will pay the child’s medical expenses and your legal expenses if the child’s parents sue.

LIABILITY

This also includes damage you do to someone else’s property.

◦ For example, if your homerun breaks your neighbor’s window, your insurance will pay for the window.

LIABILITY

This also applies if you cause injury to someone else or damage to someone else’s property when you are not at home.

IF you hit your homerun in a public park and the ball injures a spectator, you are covered. Homeowner’s insurance DOES NOT cover injuries you cause with your car.

LIABILITY

Every year, people are sued for amounts over a million dollars. Most homeowner’s and automobile policies will not protect you from awards of this size.

Coverage is usually limited to $200,00 to $500,000

You may purchase additional liability coverage at a relatively low cost.

UMBRELLA POLICY

UMBRELLA POLICIES provide additional liability protection beyond that included in an automobile or homeowner’s policy.

A $2 MILLION umbrella policy generally costs less than $1,000 per year.

UMBRELLA POLICY

Many Americans live in locations that have special risks.

Ordinary Homeowner’s insurance normally does not cover these types of losses.

Floods Earthquakes Mudslides

Special Risk Coverage

IF you live where there are unique risks, investigate insurance to cover these types of losses.

Federal programs can help some people pay for this insurance. Your insurance agent will know what is available in your area.

Special Risk Coverage

Perils are the specific cause of the loss

Most insurance companies offer six basic forms of homeowner's insurance.

The types of perils covered depend on the form you choose.

PERIL

Provides about the same property and liability coverage as homeowner’s policy.

It does not cover the structure itself or accidents that take place outside of your rented apartment or house.

Fairly Cheap: $300-$500/Year

Renter’s Insurance

Insurance companies follow an 80 percent rule in reimbursing losses.

Your insurer isn’t required to reimburse you for the total amount of a loss unless your policy covers at least 80 percent of your home’s actual replacement value at the time of your loss.

80 Percent Rule

This rule applies to any loss, not just the total loss of your house

◦ For Example: if you buy coverage for only 40 percent of your house’s replacement value, then you have only half of the coverage that you should have (40 is half of 80)

◦ So, if a tree falls on your house and causes $10,000 worth of damage, Insurance will only reimburse HALF of the loss. $5,000.

80 Percent Rule