Homeowners insurance is typically structured as a package that offers four aspects of protection:
1: Structural damage to your property is eligible for coverage if caused by a natural disaster or catastrophic event-- referred to as perils in the insurance industry. Fire, hurricane conditions, and sudden high-volume water leaks are examples of perils that are typically covered. It is important to note that flood damage, earthquake damage, and routine wear and tear are not covered. Flood and earthquake endorsements, or add-ons, may by purchased if you feel that your property is at risk for these perils. If applicable, unattached structures such as garages and tool sheds are also covered under this portion of a homeowners insurance policy.
2: Your personal belongings may be eligible for replacement if damaged or destroyed by a covered peril, or lost due to theft. Some policies also offer off-premises coverage-- meaning your belongings are protected if stolen or damaged while traveling. Additional coverage may need to be purchased for valuable luxury items, for those cases in which the reimbursement maximum does not cover the value of the item.
3: The addition of liability protection for the owner is an option with some policies. This can be beneficial if the policy-holder is at fault due to accidental damage to another person’s property, or in the event the policy-holder is legally responsible for accidental personal injury to a guest in the covered dwelling.
4: Living expenses may be reimbursable if you are forced to find temporary housing due to damage as the result of a covered peril.
Although there are no legal requirements mandating properties be covered by homeowners insurance, mortgage lenders typically require a homeowner to carry a policy in order to receive financing. Furthermore, if acquiring a condo or cooperative, the building's homeowners association may require that you not only insure the residence, but that you also use the company of their choice, and purchase a mandated minimum amount of coverage.
Given the myriad of options, determining the amount of coverage you need can seem daunting. There are several different types of policies available, which are distinguished by variations in levels of coverage. Compiling an itemized list of your personal belongings and their values can give you an idea of the amount of coverage you may need for your belongings. With respect to structural damage, some policies may cover fewer perils than others, but the opposite can be true as well-- in that some policies may be more comprehensive than required for your type of dwelling. In order to avoid purchasing unnecessary coverage, its best to have an understanding of the type of policy that is best for your dwelling and intended use.
For instance, the HO-3 policy is the most comprehensive, and is popular with landlords and owners of multi-family dwellings that are to be inhabited by renters, while the HO-6 policy is tailor-made for condominiums and cooperatives. As with typical homeowners coverage, the HO-6 policy entails liability coverage, protects personal property, and covers structural damage within the walls of the unit. As the scope of a condo owner’s policy is limited to the space within the unit, the HOA should provide coverage for the building itself under a master policy, which covers the common areas and is a shared cost funded by the common charges. In some cases the master policy is more comprehensive than merely covering common areas, and may even extend into spaces within the units. Therefore it is wise to research the HOA's master policy before choosing your individual policy to avoid carrying unnecessary coverage.
When renting, it is tempting to doubt the need for insurance, but having coverage can be beneficial to renters as well-- as going without can leave you vulnerable to great inconvenience and financial loss. In the event of a catastrophe that leads to a loss of personal property, renters insurance can aid in the replacement of your possessions. As a renter, it is important to recognize that your personal property is not covered by the landlord’s policy, so going without coverage of your own is a risk. Furthermore, renters insurance is surprisingly affordable, and the same benefits as typical homeowner’s insurance often apply-- in that liability coverage is available, and your personal belongings may be covered when traveling. The HO-4 policy is designed specifically for renters, and provides personal liability protection and coverage for the renter’s belongings in the event of theft or disaster.
Consulting a trustworthy insurance agent is the first step towards securing the policy that is perfect for your needs. When shopping for insurance policies, you should be aware of whether you are dealing with a captive agent-- one who sells for only one company, or an independent agent, who can present to you policies from various companies. An agent should listen to your concerns and assess your insurance needs, then present policy options to fit those parameters, and explain to you the specific conditions of those prospective policies. This transparent nature is a quality you should seek in an insurance agent. Make certain you understand the monetary limits of reimbursement, as outlined by your policy-- and above all, you should feel comfortable with the company and agent with which you are entrusting coverage of your property and valuables.
Please feel free to contact us for an introduction to a trustworthy insurance agent.