Homeowners FAQ

This part of your policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning, or any other disaster listed in your policy. It will not pay for damage caused by a flood, earthquake, or routine wear-and-tear. When purchasing coverage for the structure of your home, it is important to buy enough to rebuild your home.
Most standard policies also cover structures that are detached from your home such as a garage, toolshed, or gazebo. Generally, these structures are covered for about 10% of the amount of insurance you have on the structure of your home.

2. Coverage for your personal belongings.

Your furniture, clothes, sports equipment, and other personal items are covered if they are stolen or destroyed by fire, hurricane, or other insured disaster. Most companies provide coverage for 50% to 70% of the amount of insurance you have on the structure of your home. For example, if you have $100,000 worth of insurance on the structure of your home, you would have between $50,000 to $70,000 worth of coverage for your belongings. The best way to determine if this is enough coverage is to conduct a home inventory.
This part of your policy includes off-premises coverage. This means that your belongings are covered anywhere in the world, unless you have decided against off-premises coverage. Some companies limit the amount to 10% of the amount of insurance you have for your possessions. You have up to $500 of coverage for unauthorized use of your credit cards.
Expensive items like jewelry, furs, and silverware are covered, but there are usually dollar limits if they are stolen. Generally, you are covered for between $1,000 to $2,000 for all of your jewelry and furs. To insure these items to their full value, purchase a special personal property endorsement or floater and insure the item for its appraised value. Coverage includes accidental disappearance, meaning if you simply lose the item. There is also no deductible.
Trees, plants, and shrubs are also covered under standard homeowners insurance. You are generally covered for 5% of the insurance on your house and up to about $500 per item. Perils covered are theft, fire, lightning, explosion, vandalism, riot, and even falling aircraft. They are not covered for damage by wind or disease.

3. Liability protection. 

This covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by your pets. For example, if your dog accidentally ruins your neighbor’s expensive rug, you are covered. However, if your dog destroys your rug, you are not covered.
The liability portion of your policy pays for both the cost of defending you in court and any court awards (up to the limit of your policy). You are not just covered in your home, but anywhere in the world.
Liability limits generally start at about $100,000. However, experts recommend that you purchase at least $300,000 worth of protection. Some people feel more comfortable with even more coverage. You can purchase an umbrella or excess liability policy, which provides broader coverage, including claims against you for libel and slander, as well as higher liability limits. Generally, umbrella policies cost between $200 and $350 for $1 million of additional liability protection.
Your policy also provides no-fault medical coverage. In the event a friend or neighbor is injured in your home, he or she can simply submit medical bills to your insurance company. This way, expenses are paid without their filing a liability claim against you. You can generally get $1,000 to $5,000 worth of this coverage. It does not, however, pay the medical bills for your family or your pet.

4. Additional living expenses in the event you are temporarily unable to live in your home because of a fire or other insured disaster.

This pays the additional costs of living away from home because your home was damaged from fire, a storm, or another insured disaster. It covers hotel bills, restaurant meals, and other living expenses incurred while your home is being rebuilt. Coverage for additional living expenses differ from company to company. Many policies provide coverage for about 20% of the insurance on your house. You can increase this coverage, however, for an additional premium. Some companies sell a policy that provides an unlimited amount of loss-of-use coverage (for a limited amount of time).
If you rent out part of your house, this coverage will also reimburse you for the rent that you would have collected from your tenant if your home had not been destroyed.

• HO-1: Limited coverage policy 
  This bare bones policy covers you against the first 10 of the insurable disasters. It’s no longer available in most states.
• HO-2: Basic policy
  This policy provides protection against all 16 disasters. (There is a version of HO-2 designed for mobile homes.)
• HO-3: The most popular policy 
  This specialpolicy protects your home from all perils except those specifically excluded.
• HO-8: For the older home 
  Designed for older homes, this policy usually reimburses you for damage on an actual cash value basis which means replacement cost less depreciation. Full replacement cost policies may not be available for some older homes.

If you rent your home…

• HO-4: Renter
  Created specifically for those who rent the home they live in, this policy protects your possessions and any parts of the apartment that you own, such as new kitchen cabinets that you installed, against all 16 disasters.

If you own a co-op or a condo…

• H0-6: Condo/Co-op
  A policy for those who own a condo or co-op, it provides coverage for your belongings and the structural parts of the building that you own. It protects you against all 16 disasters.

• Don’t be put off.
  If you are just setting up a household, starting an inventory list can be relatively simple. If you’ve been living in the same house for many years, however, the task of creating a list can be quite daunting. Still, it’s better to have an incomplete inventory than nothing at all. Start with recent purchases and then try to remember what you can about older possessions.
• Higher value items
  Valuable items like jewelry, art work and collectibles may have increased in value since you received them. Check with your agent to make sure that you have adequate insurance for these items. They may need to be insured separately.
• Take pictures!
  Besides the list, you can take pictures of rooms and important individual items. On the back of the photos, note what is shown and where you bought it or the make. Don’t forget things that are in closets or drawers.
• Film it.
  Walk through your house or apartment, videotaping and describing the contents. Or do the same thing using a tape recorder.
• Use your computer.
  Use your computer to make your inventory list. Personal finance software packages often include a homeowners room-by-room inventory program.
• Keep your list, videos, and photos safe!
  Regardless of how you do it (written list, typed document, photos, videotape, or audio tape), keep your inventory, along with receipts in your safe deposit box or at a friend’s or relative’s home. This way you’ll be sure to have something to give your insurance representative if your home is damaged. When you make a significant purchase, add the information to your inventory while the details are still fresh in your mind.