Homeowners:
Q.) What does homeowners insurance cover?
Q.) What factors should I consider when purchasing homeowners insurance?
Q.) What are some practical things I can do to lower the cost of my homeowners insurance?
Q.) What are the policy limits (i.e., coverage limits) in the standard homeowners policy?
Q.) Where and when is my personal property covered?
Q.) What is the difference between actual cash value and replacement cost?
Q.) Do I need earthquake coverage? If so, how can I get it?
Renters:
Q.) Why would I want to buy renters insurance?
Q.) How does a renter's policy protect my personal property?
Q.) Why do some apartment complexes require tenants to have renters insurance?
Q.) What if I share my apartment with a roommate? Do we both need to have renters insurance?
Question:
What does homeowners insurance cover?
Answer:
The typical homeowners' insurance 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. Additionally homeowners insurance is required by most lenders to obtain a mortgage.
Question:
What factors should I consider when purchasing homeowners insurance?
Answer:
There are a number of factors you should consider when purchasing any product or service, and homeowner's insurance is no different.
Here are some things to consider when you purchase homeowners insurance.
- 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 resulting in you having to pay the rest out of your own pocket. Also, you will need to decide if the personal property and personal liability limits are adequate for your needs.
- Determine which, if any, additional endorsements you want/need: For example, do you want or need the personal property replacement cost endorsement, an earthquake endorsement or a jewelry endorsement?
- Consult an independent agent, like Hempkins Insurance: We will be able to assist you in a number of ways - determine if there are any gaps in coverage you may not be aware of, explain the details of the policy's exclusions and limitations, and recommend an insurance company that will live up to your expectations.
Question:
What are some practical things I can do to lower the cost of my homeowners insurance?
Answer:
There are a number of things you can do to lower the cost of your homeowners insurance. We recommend reviewing your current policy to ensure that it addresses all of your current needs.
One way to lower the cost of your homeowners insurance is to look for any discounts that you may qualify for. Many insurance companies will offer a significant discount for things such as:
- Placing both your automobile and homeowners insurance with them
- Enhancing security features - deadbolts on all your exterior doors or a security system.
Hempkins Insurance strives to maximize any discounts for which you may qualify. Another simple way to lower your homeowners insurance cost is to raise your deductible. For example, increasing your deductible from $250 to $500 will lower your premium, sometimes by as much as five or ten percent.
It is not unusual for homeowner's insurance quotes to vary by hundreds of dollars for the same coverage on the same home. So it is important to make sure each insurer is offering the same coverage.
Question:
What are the policy limits (i.e., coverage limits) in the standard homeowners policy?
Answer:
Your dwelling and other structures on the premises are protected on an all risks basis up to the policy limits. All risks mean that unless the policy specifically excludes the manner in which your home is damaged or destroyed, you will be covered. The policy limit for the dwelling is set by you, 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 of additional expenses that you may incur when the residence cannot be used because of an insured loss are equal to 20% of the policy limit on the dwelling.
The coverage limit on personal liability is determined by you at the time the policy is issued. The coverage limit on medical payments to others is usually set at $1,000 per injured person.
[Note: this answer is based on the Insurance Services Office's HO-3 policy.]
Question:
Where and when is my personal property covered?
Answer:
Personal property, with the exception of 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 homeowner's policy would provide coverage for the named perils while the dresser is in transit - even though the dresser has never been in your home.
Question:
What is the difference between actual cash value and replacement cost?
Answer:
Covered losses under a homeowner's policy can be paid on either an actual cash value basis or on a replacement cost basis. With actual cash value, the policy owner is entitled to the depreciated value of the damaged property. While under 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.
Question:
Do I need earthquake coverage? If so, how can I get it?
Answer:
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.
Question:
Why would I want to buy renters insurance?
Answer:
If you live in an apartment or a rented house, renters insurance provides important coverage for both you and your possessions. A standard renter's policy protects your personal property in most cases where theft or damage occurs. It may also pay for temporary living expenses if your rental unit is damaged. It can also shield you from personal liability. Anyone who leases a house or apartment should consider this type of coverage.
Question:
How does a renter's policy protect my personal property?
Answer:
A renter's policy provides named perils coverage. This means that the policy only pays when your property is damaged or destroyed by any of the ways specifically described in the policy. These named perils typically include:
- Fire or lightning
- Windstorm or hail
- Explosions
- Riots
- Aircraft
- Vehicles
- Smoke
- Vandalism or malicious mischief
- Theft
- Falling objects
- Weight of ice, snow, or sleet
- Accidental discharge or overflow of water or steam
- Freezing
- Sudden and accidental damage from artificially generated electrical current
- Volcanic eruptions (but this doesn't include earthquake or tremors)
Renter's coverage applies to your personal property regardless of location. This means you are covered when you are on vacation, as well as, at home.
Question:
Why do some apartment complexes require tenants to have renters insurance?
Answer:
Owners of apartment complexes buy insurance policies for their liability and to cover their buildings and personal property. However, these policies do not cover any of the tenant's property or liability. By requiring their tenants to have renters insurance, the apartment owner is assured that the tenants will not mistakenly believe the apartment complex owner's policy will provide coverage for a tenant's property or personal liability. Although this type of insurance requirement typically benefits the owner of apartment complex, there are benefits to the renter as well. We recommend that you purchase renters insurance regardless of your landlord requirements.
Question:
What if I share my apartment with a roommate? Do we both need to have renters insurance?
Answer:
Standard renter's policies cover only you and your relatives that live with you. If your roommate is not a relative, you each will need a renter's insurance policy to cover your prospective property and provide liability coverage for your own actions.
