The Property Section of a homeowners policy provides coverage for your home, your belongings, and other tangible property.
When damage happens to your home, we look to the Dwelling limit to provide coverage. In most instances you’ll want your home covered at replacement cost with special perils coverage. Replacement cost coverage does not depreciate for the age and wear and tear on your home. To qualify for replacement cost, you’ll need to make sure the dwelling limit is enough to rebuild the structure as it sits.
Special Perils coverage means you have a wider range of covered claims. Basic and broad perils coverage provide narrower policy language. Be sure to ask your agent if you are being provided special perils coverage on your dwelling.
Coverage for Other Stuctures on our property is automatically provided on most homeowners policies. Typically, you’ll have 10% of the dwelling limit provided for other structures. However, if that amount is insufficient the limit can always be increased for a large garage or pool house for instance.
Contents Coverage, also know as personal property coverage, is coverage for the contents of your home. When people consider their contents, they immediately think of the big ticket items such as large furniture and electronics. Remember though, if you have a substantial claim such as a fire, you would need to replace everything you own from your wardrobe to your spare toiletries. So make sure the limit provided is adequate for you to start over from scratch.
Contents Replacement Cost eliminates depreciation on your belongings. This could mean thousands of dollars paid out on a claim to help make you whole.
Contents Special Perils broadens the language of what is a covered claim. Rather than restricting coverage to a list of covered events, special perils gives you a list of exclusions. If it’s not specifically excluded on the policy then it’s covered.
If your family can’t live in your home due to a covered claim, then you’ll be entitled to Loss of Use Coverage. This coverage provides money to pay for a place to live, boarding for family pets, gas money for an extra long commute, etc.. Any expenses outside of your normal living situation may be covered by Loss of Use. For rental properties this would include your loss of rental income.
When you have a property claim, you’ll be responsible for paying your Deductible. Typically property deductibles start at $1000 per claim and go up from there. The higher your deductible, the more you can save on your insurance policy premiums.
Most people have heard of a homeowners claim where someone is injured on the property and the home policy pays for the damages. This is called premises liability.
Did you know that a homeowners, renters, or condo policy isn’t limited to the premises though? Liability Coverage provided on these policies follows you around worldwide! So if you’re in charge of the neighborhood fireworks display and accidentally injure someone or cause a fire, your homeowners policy may have to pay for the damage.
Personal Injury Liability Insurance covers you for lawsuits filed over issues like defamation, libel, slander, false arrest, unlawful imprisonment and malicious prosecution. These types of claims are more and more prevalent since the dawn of social media. For landlords, privacy concerns and unlawful entry can also be included.
Most people who come to your home are invited guests. Medical Payments coverage pays for small injury claims on your property regardless of liability. You wouldn’t want your grandma to have to sue you just because she fell on your property. So basically you can think of med pay coverage as a way to keep your extended family intact.
Additional Coverages and Enhancements
There are literally hundreds of endorsements available on a homeowners policy. Rather than making you purchase each of these options individually, some carriers provide Coverage Enhancers that add on many common endorsements at a discounted rate. Be sure to review the enhancer on your policy or talk to your agent to find out what is included.
Some other common endorsements are listed below.
One common claim on a homeowners insurance policy is sewage backing up in a basement. This can be caused by the municipal sewer system being overwhelmed, or a clogged waste line. Either way, the damage can be substantial and leave a disgusting mess to clean up.
Water Backup of Sewers and Drains provides coverage to clean up and repair or replace damaged items such as hot water tanks, furnaces, contents, or even finished walls and floors.
Keep in mind, this is normally excluded from homeowners insurance. The coverage has to be added on by endorsement.
Buried Utility and Service Lines outside of your home are not considered part of your house. Therefore, damage to those buried lines isn’t covered on a homeowners or other property policy.
Many carriers now offer endorsements to pay to dig up and repair damages from these hidden claims.
Equipment breakdown provides coverage for appliances, home systems and sometimes computers for damage occurring within the system. In order for coverage to apply, the damage must be sudden and accidental. Some examples would be power surges, electrical shorts, motor burnout or operator error.
Wear and tear is typically not covered. Bear in mind, even if computers are covered, software will not be.
Claims caused by shifting soil and earth movement are excluded on a homeowners policy. This includes damage caused by the collapsing of old underground mines known as Mine Subsidence.
You may be able to add this coverage to your homeowners policy or you can request a standalone mine subsidence insurance policy through the DEP. Just talk to your rep about your options.
Water damage over time is excluded on property policies including homeowners insurance. A few companies have an endorsement that will coverage damage from Hidden Water Leakage and Seepage.
This is not coverage to replace a worn out pipe or fitting, but it will cover the resulting damage from dripping or leaking water.
Damage to the exterior of your home is apparent to anyone walking by. So if you have an exterior element of your home damaged, you may want to replace undamaged items as well so everything matches.
For instance, if you have some shingles blow off in a storm, you would want matching shingles for the repair. If they’re not available then you would need an endorsement to coverage Matching of Undamaged Windows, Roofing or Siding. With this endorsement, the insurance carrier would pay to replace the entire side, or the entire roof to maintain a consistent look.
Your insurance will require that you have enough building coverage rebuild your home. That rebuild cost is calculated based on the day you buy your home policy.
Sometimes though, there are spikes in building costs that could leave you underinsured. Additional Replacement Cost endorsements increase your coverage by a percentage or even guarantee you’ll have enough to replace your home. The caveat though, you have to have enough coverage in place the day you buy your policy. So make sure you’re not underinsuring your home!
When you have a property insurance claim, very rarely is the entire property damaged. Most claims are partial losses leaving a percentage of the building undamaged.
Most municipalities have laws stating that if X% of the building is damaged, then the remainder must be torn down.
So for instance, if a fire damages 70% of your home and your town tells you to tear down the rest, then the undamaged 30% of the building would need to be replaced by Ordinance or Law coverage.
In other words, it was the ordinance that damaged the remaining 30% of your building, not the fire.