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Your Policy

Homeowner basic coverage
Homeowner insurance is designed to protect homeowners, condominium owners, and renters. Homeowners who conduct business from their homes or store business goods should seek special coverage. Insurance coverage is determined by a contract or policy. Damage caused by a lack of routine maintenance and upkeep, and water damage that occurs over a period of time is not covered. Refer to the policy exclusions section for more information on property and perils that are not normally covered.

What’s covered?
The wording of Homeowners policies can vary depending upon the form of coverage. Some polices are referred to as “Special Form” or “Open Peril” which provides coverage for any reason not specifically excluded. Covered perils are sudden and accidental events that cause damage to property. Another kind of policy is referred to as a “Broad Form” or “Named Peril” which provides coverage only for those perils listed in the policy, such as:

  • fire or lightning
  • windstorm or hail
  • explosion
  • aircraft
  • vehicles
  • riot or civil commotion
  • smoke
  • theft
  • vandalism/malicious mischief
  • glass breakage
  • volcanic eruption
  • falling objects
  • weight of ice, snow or sleet
  • freezing of plumbing
  • accidental plumbing discharge
  • rupture of steam or hot water heating system, air conditioning systems, or water heaters
  • damage from artificially generated electricity.

Policy packages
Homeowner policies are sold as a package. In your policy, Part I provides protection for your real and personal property, and Part II provides personal liability protection.

Part I: Property protection: The property-protection portion of your policy is in sections. These sections identify limits associated with your property coverage.

Coverage A: Covers your dwelling; attached structures and permanently installed fixtures in the home such as built-in appliances; plumbing, heating, air-conditioning, and electrical systems.

Coverage B: Covers detached structures such as garages; storage sheds; and shop buildings that are for personal use only. Fixtures attached to the land, such as fences, driveways, sidewalks, patios, and retaining walls, are covered for limited perils and amounts.

Coverage C: Covers personal property, including the contents of your home and other personal items owned by you or family members who live with you. This protection can be based on actual cash value or replacement cost. It’s important that you know what coverage applies to your home and property. Read your policy and discuss this with your producer (agent) or company.

Coverage D: Covers living expenses over and above your normal living expenses if you cannot live in your home while repairs are being made.

Additional property coverage: Homeowner policies may provide limited coverage for debris removal; damaged trees, shrubs, other plants, and lawns; fire-department service charges; property removal; theft or illegal use of credit or transfer cards; collapse of buildings; or glass breakage if caused by a covered peril. Coverage for these items is controlled by individual policy limitations.

Replacement-cost or actual-cash-value coverage? Replacement cost will replace your damaged or stolen goods with new items of “like kind and quality.” Actual cash value only provides for the depreciated value of the item(s).

For example: you have a 10-year-old television. A covered loss damages your home and the television is damaged beyond repair. A replacement cost policy will pay to replace the television with a new one “of like kind and quality.” If it was a medium-priced, 21-inch television, you will get a new medium-priced, 21-inch television. If your coverage is actual cash value, the company will only pay you the value of the used television. If the average life of a television is 20 years on a standard depreciation schedule, you will get about half of the cost of a new television of like kind and quality. You will have to make up the difference in order to get a new television. Check your policy for details.

Because homeowner insurance is written and rated as a single package policy, it is not designed so that you can pick and choose coverage. For example; you may not have any “other structures” on your property, but the coverage remains as part of the package.

Insuring to value
It’s important to have enough insurance to cover the value of your home and belongings. There are varied methods of reaching the proper coverage amount. Your producer (agent) or company will have an established program that will estimate your home’s approximate replacement cost. Your insurance policy is designed to cover the home only, not the cost of the land. You may wish to consult your producer (agent) or insurance company to find out if these endorsement options are available.

  • Guaranteed replacement cost coverage will pay the cost to rebuild your home as long as you have met the requirements of your insurance policy and insured to value.
  • Extended replacement cost coverage insures your home for a specific value and usually adds a 20 percent to 25 percent cushion—or extended limit—if reconstruction costs run over.
  • Inflation guard increases the amount of your homeowner insurance to keep up with inflation so that you can maintain adequate coverage to replace your home in the event of a loss.
  • Scheduled property protects articles such as jewelry, furs, stamps, manuscripts, money, guns, computers, antiques, silver and gold, memorabilia, tools, electronic apparatus, and other items that often exceed normal policy limits in your regular homeowner policy. It often provides coverage that is broader than the coverage in the home insurance policy. Increased limits on money and securities provide additional coverage for money, bank notes, securities, deeds, etc. The limit on business property also can be increased in most cases.
  • Secondary residence provides protection for a second home, such as a summer residence. Be certain that both the property value and the extension of liability protection are included.
  • Theft coverage protection can broaden the theft coverage to include personal contents in your motor vehicle, trailer, or watercraft to be covered without proof of forcible entry.
  • Credit-card forgery and depositor’s forgery coverage provides protection against loss, theft, or unauthorized use of credit cards. It also covers forgery of any check, draft, promissory note, etc. Consult your producer (agent) or insurance company regarding any exceptions that may apply.
  • Code upgrade coverage provides protection for homes that may need to be upgraded due to building codes. For example, if a fire damaged the electrical system in your older home, you would probably be required to install circuit breakers instead of continuing to use fuses.

Policy exclusions: items not covered Be aware of the exclusions that are included in most policies. The following exclusions normally apply:

  • Damage caused by earthquake, flooding, landslide, mudslide, earth movement, and nuclear accident.
  • Theft of furs, jewels, coin or stamp collections, or antiques. Limited coverage applies to these items for covered perils other than theft.
  • Damage or loss connected to a home business or storage of business goods.
  • Cost to upgrade construction to meet building code requirements.
  • Watercraft.
  • Automobiles or other motorized vehicles unless they are used on premises only for maintenance purposes.
  • Water damage that occurs over time and is not sudden and accidental.
  • Damage caused by lack of routine maintenance and upkeep.
  • Intentional acts by the homeowner or a family member.
  • Mold.

Obtaining protection for certain perils
You can obtain additional protection for the following types of situations that are not covered under most homeowner policies:

  • Flood insurance is a separate policy that can be purchased through the National Flood Insurance Program (NFIP). A lender will require flood insurance if your home is located on a floodplain. For more information, contact your producer (agent) or insurance company, call NFIP, 888-379-9531, or check NFIP’s Web site: www.floodsmart.gov.
  • Earthquake insurance is available through most insurance companies at an additional cost, usually as an endorsement to a homeowner policy.
  • Landslides and mudslides are typically not covered on homeowner policies. Check with your producer (agent) or insurance company to see if your homeowner policy includes this protection.
  • Mold Coverage can be purchased through most insurance companies as an endorsement to a homeowner policy
  • Scheduled Property Coverage can be purchased to cover articles such as jewelry, furs, stamps, money, guns, computers, antiques, artwork or other items that may exceed normal policy limits

Renter Insurance

  • Renter insurance also is sold as a package and covers your belongings and personal liability in the same way that a homeowner policy does. No coverage is written on the value of the building, so the premium for tenant coverage is low. Typically, the owner’s policy that covers the building you live in does NOT offer any protection for your property, your cost to find other housing, or your personal liability.
  • If you rent an apartment or a home, you will not always be required to have renter insurance by the lease, but without it you are often left out in the cold if the building is damaged. Renter insurance will also cover you if someone is injured in your home or elsewhere due to your negligence.