Home Insurance

To be eligible for a homeowner’s insurance policy the home must be owner occupied of one to four-family dwellings used primarily for residential purposes.

Homeowners insurance policies are packaged policies that cover your dwelling, personal property (contents within the home), personal liability, and medical payments exposures. There are other “endorsements” that you can add on to your homeowner’s policy for various things.

3 Homeowners Insurance Forms You Can Choose From

There are predominantly three different kinds of forms that traditional homeowner’s policies are written on.  Though there may be three, the differences are quite large and most every insured chooses the 3rd option presented below; the “Special Form”. Other options are available for various reasons and can make sense depending on an insured’s situation. The three primary forms that homeowner’s insurance policies are written on are:

1. Basic

  1. The least comprehensive of the three and covers only “named perils”, meaning that coverage is limited to those specially stated on the policy. If coverage is not specially stated on the policy, it is not covered. The listed coverages include:
    1. Fire
    2. Lightning
    3. Windstorm or hail
    4. Explosion
    5. Smoke
    6. Vandalism
    7. Aircraft or vehicle collision
    8. Rior or civil commotion
    9. Sinkhole collapse
    10. Volcanic activity

2. Broad

  1. Broad form coverage includes the same coverages as the “Basic” form, plus:
    1. Burglary/ Break-in damage
    2. Falling Objects (like tree limbs)
    3. Weight of ice and snow
    4. Freezing of plumbing
    5. Accidental water damage
    6. Artificially generated electricity 

3. Special

  1. Special form is read differently than the Basic and Broad forms in that instead of listing covered “perils” (losses), it lists those that are not covered. For that reason, Special Form coverage is the most popular option for insuring a home.  You can assume coverage for everything except:
    1. Ordinance of law
    2. Earthquake
    3. Flood
    4. Power Failure
    5. Neglect
    6. War
    7. Nuclear Hazard
    8. Intentional Acts 

 

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What’s included in a homeowner’s policy

Standard coverage Includes:

Most homeowner’s insurance policies offer standard coverage’s that apply to any homeowner’s insurance policy.  These are the standard coverage’s, which are usually calculated as certain percentages of the Dwelling replacement amount.

Dwelling Replacement

The amount of coverage you would have to rebuild your home in the event of a total loss. The physical structure of your home, including walls, roof, and anything else permanently attached to your house

Other Structures (usually 10% of the dwelling replacement)

The amount of coverage you would have to replace other structures on your property. Other structures located on your property that aren’t permanently attached to your house, like; shed, fence, deck etc.

Liability

The amount of coverage you would have for financial protection if you’re found to be legally obligated to pay for something, because of activity taking place on the covered premise. Coverage also extends to you and your household members for activities anywhere in the world.

Medical Payments

The amount of insurance you would have for necessary medical expenses for accidents to someone other than you (the named insured) and your other insureds, while on your property

Personal Property (usually 50% of the dwelling replacement

The amount of coverage for contents within your home, not permanently attached to your dwelling which includes things like, furniture, appliances, electronics, clothes etc.

Loss of Use (usually 20% of the dwelling replacement amount)

The amount of money the insurance company will typically provide reimbursement for reasonable expenses if you are misplaced from your home after a covered loss for things like; food, lodging, necessary transportation etc.

 

Additional or “Endorsement” Coverage’s

Beyond standard coverage’s included on a homeowner’s policy, you can elect to have additional coverage’s to either enhance your current coverage limits or add different coverage’s not listed on the policy. Many insurance companies offer different endorsements you can add on to your homeowner’s policy.  Endorsements you can typically find with your insurance provider are:

Additional replacement coverage

If you feel the replacement amount for your home is not enough, you can add additional replacement coverage.

Some companies offer an extra 25% of the dwelling amount, 50% of the dwelling amount and some will offer a guaranteed replacement amount which would guarantee the replacement to like kind and quality no matter the cost.

Identity Theft

This endorsement provides coverage for expenses resulting from identity theft or fraud for things like; certified mail to law enforcement agencies and credit bureaus, charges for long distance calls to merchants.

Replacement Cost Coverage Contents

The insurance company will usually only pay for your personal property on an actual cash value basis, meaning they don’t pay to replace your lost item with today’s value. Actual cash value is the replacement cost minus the depreciation. With the replacement cost coverage for your contents you can be sure that you have coverage up to the current value needed to replace your lost item.

Water Back Up and Sump Pump Discharge

Losses caused by water; flood, surface water or water that backs up through your sewer or drain, is excluded on your homeowner’s policy. With this endorsement you can add coverage for water that backs up through the sewer or drain or water that overflows from within a sump or sump pump. Coverage can be included up to a certain amount, usually starting at $5,000 and can be increased in $5,000 increments up to $50,000 or more in some cases.

Earthquake coverage

Homeowner’s insurance forms exclude coverage for loss by earth movement. You can find coverage for your dwelling, other structures and contents by adding on this endorsement.

Sinkhole collapse

Coverage for sinkhole is normally excluded on your homeowner’s insurance policy but can be added on as an endorsement.

Relative in Assisted Living Facility

If you elect to have this coverage extension it would allow you to insure your relative’s personal property while they are living in an assisted living facility. This would enable them to forgo having to purchase a renter’s policy to insure their personal property.

 

Homeowner’s insurance discounts

Many insurance companies will offer various discounts depending your situation.  Discounts can vary from provider to provider and may change with certain situations like the amounts of coverage you have on your other policy with the same company. Discounts are a way to help entice you as an insured to be a more favorable risk or have more of your insurance with the same company.

Multi Policy Discount

Most companies will offer a multi policy discount to your homeowner’s insurance, if you have another policy with the same insurance company. Often, insured’s will have their auto insurance with the same insurance company, or an umbrella policy to be eligible for a multi policy discount.

Claim Free discount

The claim free discount may vary from insured to insured, but generally if you have not had any claims paid out on your behalf in the last 5 years, you will be eligible for a claim free discount.

Advanced Quote Discount

Many insurance companies offer an advanced quote discount if you apply for your insurance far enough in advance (usually 8 days) before the policies effective date.

Paid in Full discounts

You may be eligible for a paid in full discount if you are paying the cost of your insurance in full, rather than making installment payments on your policy. Depending on the insurance company, it may be a sizeable amount of money you could save.

Mortgage Free Discount

A mortgage free discount may be applied to your policy if you no longer have a mortgage on your home. Again, this may depend on your insurance company and the amount of the discount can vary depending on your insurance provider, and other situations like claims history, policy type and other factors.

Green Home discount

More frequently there are insurance companies that offer discounts to homeowner’s that have various green home features like a solar roof. The green home discounts are a way to entice more people to reduce waste as well as increase their insurability.

Alarm Discount

If you have a burglar alarm, fire station alarm and other alarms that would help reduce risk, many insurance companies will reward you with a discount. Depending on the carrier and the type of alarm, you may see different results on the amount or percentage you could see adjusted on your policy premium.

*discounts can vary from insurer to insurer, and others may exist beyond those listed*

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