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518-869-3535 Toll Free 888-869-3535Homeowners Insurance FAQs
FAQ's for Homeowners Insurance
How Much Home Insurance is Enough?
How do I Decide How Much Insurance is Enough?
What Steps Do I Take To Reduce the Danger of Being Underinsured?
What are some practical things I can do to lower the cost of my homeowners insurance?
What does homeowners insurance cover?
What is the difference between "actual cash value" and "replacement cost"?
What factors should I consider when purchasing homeowners insurance?
What is a personal umbrella liability policy?
How do I know if I need a personal umbrella liability policy?
What are the policy limits (i.e., coverage limits) in the standard homeowners policy?
Where and when is my personal property covered?
Do I need earthquake coverage? How can I get it?
How Much Home Insurance is Enough?
The cost to rebuild your home is its replacement value. This can be very different from the estimated market value or actual purchase price. In most cases, it costs more to rebuild the home you own than to buy a new one. This is an important insight into why your Dwelling (Coverage A) limit is so important.
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How do I Decide How Much Insurance is Enough?
We'll work with you to estimate the replacement cost for your home and to adjust your policy limits from time to time as needed. It is critical that you provide us with accurate, updated information about your home and contents. If your dwelling limit accurately reflects your home's true replacement cost, some companies will pay more than the limit if a covered loss is greater than the limit on your policy. Ask us if Home Replacement Guarantee or Extended Dwelling Coverage, is available in your state. Once a review of your home and possessions indicates you are properly insured, it's a good idea to reexamine your coverage's and limits from time to time, especially whenever you make additions or improvements.
Back to top
What Steps Do I Take To Reduce the Danger of Being Underinsured?
1. Call us. If you have questions or concerns about the limits in your policy, ask us to show you how those amounts were calculated. This will also give you an opportunity to make us aware of any overlooked information. 2. Read your policy. Certain property, such as jewelry, and certain perils, such as earthquake or flood, is better insured separately. Knowing what is covered and for how much will help you insure properly. If there is anything in your policy you don't understand, contact your agent and ask for an explanationAt each annual renewal of your policy, you receive a new Policy Declarations page showing limits of coverage and optional coverage's. Review this information. If you do any significant remodeling or add a family room, extra bedroom or bathroom, etc., tell us about these changes so your coverage limits can be adjusted to cover the improvement. 3. Consider carefully whether your policy provides all the protection you need. Does it provide coverage for extra costs resulting from building code changes? Does it automatically increase coverage limits annually to keep pace with inflation? Does it provide additional funds if the cost of rebuilding your home exceeds the policy limits? Find out whether your insurance company will stand behind agreed upon repairs after a claim. Some companies are willing to put this guarantee in writing. Does your policy include replacement cost coverage for contents (clothing, furniture, appliances, and other personal property inside your home)? If not, you can add it by endorsement. The cost is small, the protection valuable. Replacement Cost Coverage pays for losses to your possessions at the cost of brand new items. Without this option, a covered loss to your personal possessions would be depreciated by their age and condition, reducing the size of your claim settlement. If you have an art collection, antique furniture, jewelry, or other valuable possessions, talk to your agent about supplemental coverage's, such as fine arts or scheduled property endorsements, to adequately protect your investment in these items. The cost is modest for the extra protection, and often the deductible is waived. Consider whether you should have more coverage for personal property (contents) than your policy provides. Personal property coverage is usually 70% of the coverage limit for the structure. Your limit may be lower than 70%. Supplemental protection is available for a small additional premium. 4. Prepare an inventory of personal property items, update it periodically, and keep it in a safe place outside your home, such as a safe deposit box at your bank. It will save you hours of time trying to list everything damaged or destroyed if you need to make a claim. It will also help ensure you don't forget some items. We can advise you on ways to simplify the job of preparing a personal property inventory such as videotaping each room with descriptive information on the sound track. Besides making sure you have enough protection to cover possible damage to your own home and contents, you should also evaluate your exposure to liability risks. These result from damage to the property of another, or injury to a person, not a member of your household, for which you can be responsible. In recent years it's become common for homeowners to be sued for injuries or damages to others, even when there is no evidence of negligence by the homeowner. The reality today is if you have any appreciable assets, you are exposed to the risk of being sued. Even if you ultimately prevail in court, your legal fees and the months or years of worry and uncertainty can be a terrible burden on you and your family. The Personal Liability coverage provided by your Homeowners Policy usually provides a limit of $100,000 or $300,000. We recommend increasing this protection with a personal umbrella policy. Not only will it increase your personal liability, but also your auto liability. Limits are available from $1 million to $10 million and beyond. The cost of this coverage is usually very reasonable.
Back to top
What are some practical things I can do to lower the cost of my homeowners insurance?
There are a number of things you can do to lower the cost of your homeowners insurance. The easiest thing to do is get a comprehensive review of your policy and needs from your local agent. It is not surprising to find quotes on homeowners insurance that vary by hundreds of dollars for the same coverage on the same home. When you shop, be careful to make sure each insurer is offering the same coverage. Another way to lower the cost of your homeowners insurance is to look for any discounts that you may qualify for. For example, many insurers will offer a discount when you place both your automobile and homeowners insurance with them. Other times, insurers offer discounts if there are deadbolt exterior locks on all your doors, or if your home has a security system. Be sure to ask us about any discounts for which you may qualify Another easy way to lower the cost of your homeowners insurance is to raise your deductible. Increasing your deductible from $250 to $500 will lower your premium, sometimes by as much as five or ten percent.
Back to top
What does homeowners insurance cover?
The typical homeowners policy has two main sections: Section I covers the property of the insured and Section II provides personal liability coverage for the insured. Almost anyone who owns or leases property has a need for this type of insurance. Usually, homeowners insurance is required by the lender to obtain a mortgage.
Back to top
What is the difference between "actual cash value" and "replacement cost"?
Covered losses under a homeowners policy can be paid on either an actual cash value basis or on a replacement cost basis. When "actual cash value" is used, the policy owner is entitled to the depreciated value of the damaged property. Under the "replacement cost" coverage, the policy owner is reimbursed an amount necessary to replace the article with one of similar type and quality at current prices.
Back to top
What factors should I consider when purchasing homeowners insurance?
There are a number of factors you should consider when purchasing any product or service, and insurance is no different. Here is a checklist of things you should consider when you purchase homeowners insurance. 1. Determine the amount and type of insurance that you need. The coverage limit of your house should equal 100% of its replacement cost. If your policy limit is less than 80% of the replacement cost of your home, any payment from your insurance company will be less than the full cost to replace your home -- you'll have to pay the rest out of your own pocket. Also, decide if the personal property and personal liability limits are adequate for your needs. 2. Determine which, if any, additional endorsements you want to add to your policy. For example, do you want the personal property replacement cost endorsement, an earthquake endorsement or a jewelry endorsement? 3. Once you have decided on the coverage you want in your homeowners insurance policy, consult us. We will be able to help you determine if there are any gaps in coverage you might not have been aware of, explain the details of the policy's exclusions and limitations as well as recommend an insurance company that will live up to your expectations.
Back to top
What is a personal umbrella liability policy?
The personal umbrella liability policy is designed to increase your liability protection. This single policy acts as an "umbrella" over all of your other personal liability policies -- home, auto, boat, RV, etc. -- so you have a higher personal liability limit than what would otherwise be available. In certain circumstances, an umbrella policy may provide personal liability coverage that is otherwise excluded from your other policies. For example, an umbrella policy provides coverage anywhere in the world, whereas your auto policy usually provides coverage in the US and Canada only.
Back to top
How do I know if I need a personal umbrella liability policy?
It used to be that the only people who needed personal umbrella liability policies were wealthy individuals who had sizable amounts of personal assets that would be at risk in a lawsuit. However, in our very litigious society, even individuals with modest incomes and assets are often subjects of large lawsuits. Since they are even less able than a wealthy individual to pay large damage awards, they recognize the need to have coverage limits greater than what can be obtained from their homeowner or auto policies.
Back to top
What are the policy limits (i.e., coverage limits) in the standard homeowners policy?
[Note: this answer is based on the Insurance Services Office's HO-3 policy.] The dwelling and other structures on the premises are protected on an "all risks" basis up to the policy limits. "All risks" means that unless the policy specifically excludes the manner in which your home is damaged or destroyed, there is coverage. The policy limit for the dwelling is set by the policy owner at the time the insurance is purchased. The policy limit for the other structure is usually equal to 10% of the policy limit for the dwelling. Losses to your personal property are covered on a "named perils" basis. "Named perils" means that you have coverage only when your property is damaged or destroyed in the manner specifically described in the policy. The policy limit on the coverage is equal to 50% of the policy limit on the dwelling. Limits for the coverage for the additional expenses that the policy owner may incur when the residence cannot be used because of an insured loss is equal to 20% of the policy limit on the dwelling. The coverage limit on personal liability is determined by the policy owner at the time the policy is issued. The coverage limit on medical payments to others is usually set at $1000 per injured person.
Back to top
Where and when is my personal property covered?
Personal property (except property that is specifically excluded) is covered anywhere in the world. For example, suppose that while traveling, you purchased a dresser and you want to ship it home. Your homeowners policy would provide coverage for the named perils while the dresser is in transit -- even though the dresser has never been in your home before.
Back to top
Do I need earthquake coverage? How can I get it?
The standard insurance policy does not pay for direct damages caused by "earth movement." "Earth movement" is a much broader term than earthquake. It includes earthquake, volcanic activity and other earth movement. This coverage may be available by endorsement for an additional charge. If you live in an area that is more likely to have an earthquake, you'll pay more than if you live in an area that is unlikely to have an earthquake.. We can help you weigh the costs and benefits of this coverage before you decide to purchase.
Back to top
How Much Home Insurance is Enough?
How do I Decide How Much Insurance is Enough?
What Steps Do I Take To Reduce the Danger of Being Underinsured?
What are some practical things I can do to lower the cost of my homeowners insurance?
What does homeowners insurance cover?
What is the difference between "actual cash value" and "replacement cost"?
What factors should I consider when purchasing homeowners insurance?
What is a personal umbrella liability policy?
How do I know if I need a personal umbrella liability policy?
What are the policy limits (i.e., coverage limits) in the standard homeowners policy?
Where and when is my personal property covered?
Do I need earthquake coverage? How can I get it?
How Much Home Insurance is Enough?
The cost to rebuild your home is its replacement value. This can be very different from the estimated market value or actual purchase price. In most cases, it costs more to rebuild the home you own than to buy a new one. This is an important insight into why your Dwelling (Coverage A) limit is so important.
Back to top
How do I Decide How Much Insurance is Enough?
We'll work with you to estimate the replacement cost for your home and to adjust your policy limits from time to time as needed. It is critical that you provide us with accurate, updated information about your home and contents. If your dwelling limit accurately reflects your home's true replacement cost, some companies will pay more than the limit if a covered loss is greater than the limit on your policy. Ask us if Home Replacement Guarantee or Extended Dwelling Coverage, is available in your state. Once a review of your home and possessions indicates you are properly insured, it's a good idea to reexamine your coverage's and limits from time to time, especially whenever you make additions or improvements.
Back to top
What Steps Do I Take To Reduce the Danger of Being Underinsured?
1. Call us. If you have questions or concerns about the limits in your policy, ask us to show you how those amounts were calculated. This will also give you an opportunity to make us aware of any overlooked information. 2. Read your policy. Certain property, such as jewelry, and certain perils, such as earthquake or flood, is better insured separately. Knowing what is covered and for how much will help you insure properly. If there is anything in your policy you don't understand, contact your agent and ask for an explanationAt each annual renewal of your policy, you receive a new Policy Declarations page showing limits of coverage and optional coverage's. Review this information. If you do any significant remodeling or add a family room, extra bedroom or bathroom, etc., tell us about these changes so your coverage limits can be adjusted to cover the improvement. 3. Consider carefully whether your policy provides all the protection you need. Does it provide coverage for extra costs resulting from building code changes? Does it automatically increase coverage limits annually to keep pace with inflation? Does it provide additional funds if the cost of rebuilding your home exceeds the policy limits? Find out whether your insurance company will stand behind agreed upon repairs after a claim. Some companies are willing to put this guarantee in writing. Does your policy include replacement cost coverage for contents (clothing, furniture, appliances, and other personal property inside your home)? If not, you can add it by endorsement. The cost is small, the protection valuable. Replacement Cost Coverage pays for losses to your possessions at the cost of brand new items. Without this option, a covered loss to your personal possessions would be depreciated by their age and condition, reducing the size of your claim settlement. If you have an art collection, antique furniture, jewelry, or other valuable possessions, talk to your agent about supplemental coverage's, such as fine arts or scheduled property endorsements, to adequately protect your investment in these items. The cost is modest for the extra protection, and often the deductible is waived. Consider whether you should have more coverage for personal property (contents) than your policy provides. Personal property coverage is usually 70% of the coverage limit for the structure. Your limit may be lower than 70%. Supplemental protection is available for a small additional premium. 4. Prepare an inventory of personal property items, update it periodically, and keep it in a safe place outside your home, such as a safe deposit box at your bank. It will save you hours of time trying to list everything damaged or destroyed if you need to make a claim. It will also help ensure you don't forget some items. We can advise you on ways to simplify the job of preparing a personal property inventory such as videotaping each room with descriptive information on the sound track. Besides making sure you have enough protection to cover possible damage to your own home and contents, you should also evaluate your exposure to liability risks. These result from damage to the property of another, or injury to a person, not a member of your household, for which you can be responsible. In recent years it's become common for homeowners to be sued for injuries or damages to others, even when there is no evidence of negligence by the homeowner. The reality today is if you have any appreciable assets, you are exposed to the risk of being sued. Even if you ultimately prevail in court, your legal fees and the months or years of worry and uncertainty can be a terrible burden on you and your family. The Personal Liability coverage provided by your Homeowners Policy usually provides a limit of $100,000 or $300,000. We recommend increasing this protection with a personal umbrella policy. Not only will it increase your personal liability, but also your auto liability. Limits are available from $1 million to $10 million and beyond. The cost of this coverage is usually very reasonable.
Back to top
What are some practical things I can do to lower the cost of my homeowners insurance?
There are a number of things you can do to lower the cost of your homeowners insurance. The easiest thing to do is get a comprehensive review of your policy and needs from your local agent. It is not surprising to find quotes on homeowners insurance that vary by hundreds of dollars for the same coverage on the same home. When you shop, be careful to make sure each insurer is offering the same coverage. Another way to lower the cost of your homeowners insurance is to look for any discounts that you may qualify for. For example, many insurers will offer a discount when you place both your automobile and homeowners insurance with them. Other times, insurers offer discounts if there are deadbolt exterior locks on all your doors, or if your home has a security system. Be sure to ask us about any discounts for which you may qualify Another easy way to lower the cost of your homeowners insurance is to raise your deductible. Increasing your deductible from $250 to $500 will lower your premium, sometimes by as much as five or ten percent.
Back to top
What does homeowners insurance cover?
The typical homeowners policy has two main sections: Section I covers the property of the insured and Section II provides personal liability coverage for the insured. Almost anyone who owns or leases property has a need for this type of insurance. Usually, homeowners insurance is required by the lender to obtain a mortgage.
Back to top
What is the difference between "actual cash value" and "replacement cost"?
Covered losses under a homeowners policy can be paid on either an actual cash value basis or on a replacement cost basis. When "actual cash value" is used, the policy owner is entitled to the depreciated value of the damaged property. Under the "replacement cost" coverage, the policy owner is reimbursed an amount necessary to replace the article with one of similar type and quality at current prices.
Back to top
What factors should I consider when purchasing homeowners insurance?
There are a number of factors you should consider when purchasing any product or service, and insurance is no different. Here is a checklist of things you should consider when you purchase homeowners insurance. 1. Determine the amount and type of insurance that you need. The coverage limit of your house should equal 100% of its replacement cost. If your policy limit is less than 80% of the replacement cost of your home, any payment from your insurance company will be less than the full cost to replace your home -- you'll have to pay the rest out of your own pocket. Also, decide if the personal property and personal liability limits are adequate for your needs. 2. Determine which, if any, additional endorsements you want to add to your policy. For example, do you want the personal property replacement cost endorsement, an earthquake endorsement or a jewelry endorsement? 3. Once you have decided on the coverage you want in your homeowners insurance policy, consult us. We will be able to help you determine if there are any gaps in coverage you might not have been aware of, explain the details of the policy's exclusions and limitations as well as recommend an insurance company that will live up to your expectations.
Back to top
What is a personal umbrella liability policy?
The personal umbrella liability policy is designed to increase your liability protection. This single policy acts as an "umbrella" over all of your other personal liability policies -- home, auto, boat, RV, etc. -- so you have a higher personal liability limit than what would otherwise be available. In certain circumstances, an umbrella policy may provide personal liability coverage that is otherwise excluded from your other policies. For example, an umbrella policy provides coverage anywhere in the world, whereas your auto policy usually provides coverage in the US and Canada only.
Back to top
How do I know if I need a personal umbrella liability policy?
It used to be that the only people who needed personal umbrella liability policies were wealthy individuals who had sizable amounts of personal assets that would be at risk in a lawsuit. However, in our very litigious society, even individuals with modest incomes and assets are often subjects of large lawsuits. Since they are even less able than a wealthy individual to pay large damage awards, they recognize the need to have coverage limits greater than what can be obtained from their homeowner or auto policies.
Back to top
What are the policy limits (i.e., coverage limits) in the standard homeowners policy?
[Note: this answer is based on the Insurance Services Office's HO-3 policy.] The dwelling and other structures on the premises are protected on an "all risks" basis up to the policy limits. "All risks" means that unless the policy specifically excludes the manner in which your home is damaged or destroyed, there is coverage. The policy limit for the dwelling is set by the policy owner at the time the insurance is purchased. The policy limit for the other structure is usually equal to 10% of the policy limit for the dwelling. Losses to your personal property are covered on a "named perils" basis. "Named perils" means that you have coverage only when your property is damaged or destroyed in the manner specifically described in the policy. The policy limit on the coverage is equal to 50% of the policy limit on the dwelling. Limits for the coverage for the additional expenses that the policy owner may incur when the residence cannot be used because of an insured loss is equal to 20% of the policy limit on the dwelling. The coverage limit on personal liability is determined by the policy owner at the time the policy is issued. The coverage limit on medical payments to others is usually set at $1000 per injured person.
Back to top
Where and when is my personal property covered?
Personal property (except property that is specifically excluded) is covered anywhere in the world. For example, suppose that while traveling, you purchased a dresser and you want to ship it home. Your homeowners policy would provide coverage for the named perils while the dresser is in transit -- even though the dresser has never been in your home before.
Back to top
Do I need earthquake coverage? How can I get it?
The standard insurance policy does not pay for direct damages caused by "earth movement." "Earth movement" is a much broader term than earthquake. It includes earthquake, volcanic activity and other earth movement. This coverage may be available by endorsement for an additional charge. If you live in an area that is more likely to have an earthquake, you'll pay more than if you live in an area that is unlikely to have an earthquake.. We can help you weigh the costs and benefits of this coverage before you decide to purchase.
Back to top
