Reading a homeowners policy may not be on your “Bucket List” but it is important to understand what is covered, what is limited in coverage and what is excluded from coverage. Often the homeowners policy can be modified to add needed coverages for an additional premium. However, here are situations where no coverage can be found,and while that may not be the answer you want, you need to be aware of such issues. This overview is provided as an overview of a typical homeowners policy but you must refer to the provisions found in your policy for the details of your coverage, terms, conditions and exclusions that apply. If you have questions call us for answers or to schedule a review of all of your insurance policies.
A typical homeowners policy covers both dwelling and contents for various perils, including fire and theft. Also included are coverages for glass breakage and liability. A homeowner policy may also include coverage for personal articles and earthquake. There are also similar policies available for tenants and condominium/cooperative unit owners.
Most policies also have limitations on some items including (to name a few): Money, watercraft, trailers, jewelry, furs, silverware, firearms, or items used for business. Please be sure to ask us how to insure these items for the proper limit. Most homeowners policies are made up of the following coverages:
Dwelling (referred to as Coverage A in the policy)
Your house and structures attached to it, such as an attached garage.
Other Structures (Coverage B)
Structures on your property that are not attached to the house. For example, a detached garage, gazebo, or storage shed.
Personal Property (Coverage C)
Your personal possessions, such as furniture, clothing and appliances. There are certain types of possessions that are excluded or that have limited coverage. Please see Personal Property Exclusions and Limits of Coverage for more specific information.
Loss of Use (Coverage D)
Pays for your housing and other living expenses if a major loss makes your house uninhabitable and you have to move out temporarily.
A homeowners insurance policy provides protection from the following covered perils:
Fire or lightning, Windstorm or hail, Explosion, Aircraft, Vehicles, Riot or civil commotion, Smoke, Theft, Vandalism/malicious mischief, Glass breakage, Volcanic eruption
Some policies also include the following as covered perils:
Falling Objects, Weight of ice, snow or sleet, Freezing of plumbing, Accidental plumbing discharge, Rupture of steam or hot water heating systems, air conditioning systems, or water heaters, Damage from artificially generated electricity
A homeowners policy does not provide coverage for the following perils:
Loss due to flood, or water that backs up through sewers, loss to building by earthquake, aftershocks and mud slides, loss by enforcement law or ordinance regulating construction, repair or demolition, or zoning, loss due to power interruption when the interruption takes place off the residence property, loss due to the insured’s neglect to save and preserve property following a loss, war and nuclear perils, intentional loss
Limits of Liability
For basic homeowners policies, a specific minimum limit of liability is required for each of the major property coverages, based on the primary amount of insurance selected.
· Coverage A (Dwelling) = Primary limit
· Coverage B (Other Structures) = 10% of Coverage A limit
· Coverage C (Personal Property) = 50% of Coverage A limit
· Coverage D (Loss of use) = 20% of Coverage A limit
For example, if your home is insured for $100,000 under Coverage A:
Coverage B liability limit is $10,000, Coverage C is $50,000, Coverage D is $20,000
With a homeowners policy, a deductible applies to the property portion of the policy. A deductible is the amount you would have to pay out of your own pocket before the insurance coverage is applied. Typical deductible is $500 or higher and some policies have several deductibles. The higher the deductible you select, the lower your premium payment is.
Endorsements are modifications which enhance your basic homeowners policy either by adding or removing certain coverages. Some of the more common endorsements include:
· Contents replacement cost coverage– after a loss, you would be paid based on the replacement cost … with no deduction for depreciation … subject to your policy limits and deductible. Special limits apply to certain items such as jewelry, watches and furs.
· Valuable Items Coverage– provides broader coverage on a blanket basis for some valuable items, i.e., jewelry.
· Water Back Up of Sewers or Drains– you’re covered for a specific dollar amount if water backs up through a sewer or drain, or overflows from a sump pump.
Personal Property Exclusions and Limits of Coverage
Certain classes of property are specifically excluded from coverage because of the nature of what they are or because they are generally covered by other types of policies:
· Animals, birds or fish
· Motorized vehicles or aircraft, including equipment and accessories
· Radios, CB radios, tape decks, etc., while in or on a motor vehicle
· Articles separately described and specifically insured in any other insurance
· Property of boarders
· Aircraft or aircraft parts
· Property in an apartment held for rental by the insured
· Property rented to others off the residential premises
Certain classes of property have specialized limits of coverage:
· money or related property, coins and precious metals other than tableware
· securities, manuscripts, and other valuable property
· water craft, including trailers and equipment
· grave markers
· loss by theft of jewelry, watches, furs and semi-precious stones
· loss by theft of firearms
· loss by theft of silverware, goldware or pewterware
· property on the residence premises used for business purposes
· property away from residence premises used for business purposes
There are several endorsements or separate policies to cover personal property items for higher limits of coverage. For more information, you should speak with one of our agents.
Personal Liability (Coverage E)
Provides coverage for bodily injury property damage that you are legally responsible for. For example: your dog bites someone; a guest falls down your front stairs; your son throws a ball through your neighbor’s window. One of our agents will help you determine whether the liability limits on your homeowner policy are sufficient for your needs if you need additional coverage, an Excess Liability (or umbrella) policy may be recommended.
Medical Payments (Coverage F)
Pays all reasonable and necessary medical expenses for a period of three years from the date of an accident to a person or persons injured while on your property. This coverage does not apply to the insured or regular residents of the insured’s household.
Accidental physical injury to others caused by you, residents of your household, or your pets.
Accidental damage to the property of others caused by you, residents of your household, or your pets.
Liability Coverage Exclusions
A homeowners policy does not provide coverage for:
· bodily injury or property damage which is expected or intended by the insured
· bodily injury or property damage arising out of business pursuits
· bodily injury or property damage arising out of rental of any part of the premises
· liability arising out of ownership, maintenance, use, loading or unloading of aircraft, motor vehicles or water craft
· liability arising out of war or insurrection
Additional exclusions to Coverage E only
· liability assumed under contract or agreement
· property damage to property owned by, used by or in the care of the insured
· bodily injury which is covered under a Workers Compensation policy
This overview is provided as an overview of a typical policy. You must refer to the provisions found in your policy for the details of your coverage, terms, conditions and exclusions that apply. If you have questions call us for answers or to schedule a review of all of your insurance policies.