Understanding Your Homeowners Insurance Proposal

Choose from Personal Auto, Home/Renters/Dwelling Fire, or Umbrella Liability below for a glossary of insurance terms on your insurance proposal.

Property Section

The Property Section of a homeowners policy provides coverage for your home, your belongings, and other tangible assets.

Dwelling

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.

Other Structures

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

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

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

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.

Loss of Use

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.

Water Backup

One common claim on a homeowners insurance policy is sewage backing up in a basement. This can be caused by a sewer system being inundated, 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.

Coverage Enhancer

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.

Underground Service Line

Buried Utility 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.

Deductible

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.

Liability Section

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

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.

Medical Payments

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.

How can home insurance protect you?

Use the yellow hot spots and explore how home insurance can help protect against common risks.
Home

Fire

Risk Factor

Most fires are devastating. Besides the emotional impact, the physical damage to your home can be significant. If you lost your home to fire, do you have adequate insurance to replace your home and its contents? Remember, inflation rates on building materials and construction costs rarely track with real estate values. As a result, rebuilding a home can often cost significantly more than expected.

Solution

Make sure your homeowners policy contains guaranteed replacement cost coverage. This protects you if the cost to reconstruct your home is higher than your current limit of coverage. Also be sure that your insurance includes rebuilding your home to code. Very often, local ordinances and building codes change over time, which may require additional costs.

Personal Property / Contents - Property Damage

Risk Factor

When your home suffers damage due to an unexpected event, your personal property is also at risk. Furniture, appliances, clothing, electronics and other personal items can also be damaged or destroyed.

Solution

Your homeowners insurance policy typically covers personal property, including the contents of your home and other personal items owned by you or family members who live with you. Make sure your homeowners policy includes replacement cost coverage for personal property so that you always receive the full cost to replace whatever item is damaged.

Additional Living Expense / Loss of Use

Risk Factor

When there is substantial damage to your home due to unexpected events such as lightning, fire or a storm, you may not be able to live in your home until it can be repaired or rebuilt – potentially incurring additional living expenses for lodging, food and other daily needs.

Solution

Ensure that your homeowners insurance policy provides additional living expense or loss of use coverage to compensate you for the additional costs you incur for reasonable housing and living expenses if a covered event makes your house temporarily uninhabitable while it's being repaired or rebuilt.

Jewelry, Fine Arts and Collectibles

Risk Factor

If your diamond ring disappears or valuable artwork is stolen, your standard homeowners policy may not compensate you for the loss. Homeowners policies include coverage for your belongings and personal property, but some special items like jewelry, furs, silverware, antiques, collectibles and other valuables have limited or no coverage and need to be insured separately.

Solution

Valuable possessions insurance covers personal property that may have unique value, cannot be replaced like regular personal property or is subject to special types of losses such as breakage or mysterious disappearance. For most valuable possession categories, there is no deductible applied at time of loss. Valuable possessions insurance can be added to your homeowners policy or may be written as a separate policy.

Medical Expenses

Risk Factor

If a guest is injured while on your property, even when it’s due to a friendly game of baseball, you may be required to pay any medical expenses associated with their injury.

Solution

Your homeowners policy should include medical expenses coverage to take care of injuries and treatment - generally not of a serious nature. In the event a person is injured on your property and requires medical attention, you would be able to submit the injury-related medical expenses to your insurance carrier. Medical expenses are usually paid without a liability claim being filed against you.

Personal Liability

Risk Factor

In the unfortunate event that someone slips and falls while on your property, you and your family may be held liable for any injuries that result.

Solution

Your homeowners policy includes personal liability coverage to respond to incidents where injuries or damages occur to a third party where you may be deemed negligent. However, you should consider purchasing a personal umbrella or excess liability policy to provide additional coverage limits to protect your assets in case a lawsuit is brought against you.

Miscellaneous Coverage

Risk Factor

The fun that comes with having a trampoline in your backyard can also be accompanied by serious risks, which may not be covered under your standard homeowners insurance policy since coverage varies from state to state and between insurance companies.

Solution

You should make sure your homeowners insurance policy covers your trampoline, as many insurance providers refuse to take on trampoline liability and exclude the item from coverage.

Personal Injury

Risk Factor

Young people are usually very active online. However, using social media and other sites can increase the possibility of them directly or indirectly damaging someone's reputation and exposing you, the parent, to a lawsuit.

Solution

Your homeowners insurance policy includes liability coverage for property damage caused by any member in the family, but it may not cover rumors or statements that damage a reputation. You need to add an endorsement to your policy to expand coverage to include liability protection that covers personal injury.

Umbrella / Excess Liability Coverage

Risk Factor

You invite guests over for a barbecue pool party and one of your guests dives into the shallow end of the pool and is permanently injured. They hire a lawyer to represent them and after a long legal battle, you and your family are left financially responsible for their injuries. Do you have enough money in savings to cover your legal responsibilities as well as the legal defense costs?

Solution

An umbrella or excess liability policy increases your personal liability limits by adding protection over and above your current auto, boat or homeowners policies - providing real financial value, as well as priceless peace of mind. Excess liability insurance is available either by an endorsement to your homeowners policy or available as separate coverage.

Flood Coverage

Risk Factor

You do not have to live near a body of water to suffer loss due to flooding. With the changing weather patterns and more damaging storms occurring around the globe, flood losses are becoming more common in places that are not normally prone to flood damage. Your homeowners policy does not cover damage from flood. Could your home be at risk?

Solution

Purchase a flood insurance policy to protect your home and covered contents from certain types of flood losses as designated by the National Flood Insurance Program. A flood policy is purchased as a separate policy through the federal program (NFIP) or through a servicing carrier known as a write your own carrier.

Secondary Home

Risk Factor

Owning a secondary home has the potential of increasing your liability exposures.

Solution

Be certain that you extend the liability coverage under your homeowners policy to include your secondary home. You should also consider including the secondary home under an excess liability or umbrella policy to provide for additional liability limits.

Collector Cars

Risk Factor

Collector vehicles often have significant value and require specialized insurance coverage and claims handling.

Solution

Schedule your collectible vehicle on a separate collector car policy. By doing so, you are protecting the vehicle for either the appraised value or market value.

Wine Collection

Risk Factor

If you are a connoisseur of wine, you know that it is susceptible to outside environmental exposures that can ruin it. If the collection is damaged, coverage from your homeowners policy is a possible recourse. However, the damage is only insurable if it is a covered cause of loss as outlined in your homeowners policy. A deductible would also apply.

Solution

If you have a sizable wine collection, you may want to consider scheduling the collection on your homeowners policy. Doing so expands your coverage and eliminates the deductible in case of a loss. You can also consider unique coverages for wine, such as for spoilage.

Water Back-Up

Risk Factor

Most homeowners policies exclude coverage for water back-up damages as a result of a clogged drain, sewer or sump pump.

Solution

Water back-up coverage can be added to most insurance policies. Consider adding it so that you have the coverage you need in the event of damages caused by a clogged drain, sewer, sump pump and related risks.

Off-Premises Theft

Risk Factor

Surprisingly, standard auto insurance does not cover personal property or contents stolen from your car.

Solution

Most homeowners policies offer an option to include off-premises theft coverage as an endorsement, which covers you for theft of your personal property away from your residence.