Homeowners Insurance

The 30-Second Rundown

One of the most common investments people make is a home purchase. People spend hundreds of thousands of dollars, even millions, on their homes. It’s not only a place to live, but also an important asset. A homeowners insurance policy is a way to help protect this asset. Many insurance companies offer homeowners policies, so it’s important to research before buying a policy so that you can be sure to get the best coverage for your expense.

Why is Homeowners Insurance So Important?

After spending a large sum of money, you want to maintain the value of your home. In addition, owning a home comes with liability, meaning you are responsible for anything that happens on your property. Homeowners insurance protects you in the event that something happens to your house or to a guest on your property.

A line of Homeowners Insurance will protect against most standard home related risks, such as accidental fire damage and theft. There are also more specialized lines of Homeowners Insurance that protect against natural disasters, such as hurricanes and floods.

What is Included in Homeowners Insurance Policies

There are three major parts to Homeowners Insurance to consider:

1. Dwelling Coverage: Coverage for the dwelling is initially dictated by the bank so as to protect its interest. As the loan balance goes down, the value often increases, which means that the cost of the coverage will likely increase the longer you own and insure the home. The most popular form of dwelling coverage is Form 5, or what is referred to as Guaranteed Replacement Cost. This assures the homeowner/insured that in the event of a total loss, there is adequate coverage to ensure that the home can be rebuilt as it was.

This includes coverage for outbuildings such as shed or pool buildings, garages or decks. Replacement cost coverage is most often calculated using a square footage method and must be done correctly so as to not over- or under-insure the dwelling. The living area and construction type as well as heating type and any chimneys or fireplaces factor in as well as the type of furnishings. Your insurance agent can explain this calculation to you.

2. Personal Property Protection: Personal Property protection is generally divided into three major categories:

  • Furnishings and Personal Items, such as your TV, furniture, stereo, computers, clothing, dishes, etc. Generally, coverage is made available for actual cash value but replacement value is a very reasonable extra cost and can mean the difference between having enough coverage to pay 75 percent of the cost of a damaged or ruined item as opposed to the full replacement cost. The policy may include limited coverage for items such as high-end jewelry (diamond rings, expensive watches) and art. Those items can be fully covered by purchasing a rider that uses a detailed appraisal as a method of determining the amount of coverage the insured adds to the basic policy.
  • Loss of use or living expenses: Pays for rental and other living expenses, if your home is seriously damaged or destroyed and cannot safely be occupied while repairs are being made
  • Miscellaneous: Standard policies also include limited coverage for:
  • Debris removal, and damage to trees, plants and shrubs.
  • Reimbursement if your credit card or debit card is stolen.

3. Liability Protection: This very important section of the policy covers medical and liability expenses in the event someone is injured while on your property. This coverage provides financial support if someone is injured while on your property and extends your protection beyond your property limits. For example, this provision pays for accident or property damage for a family member at another location. Coverage usually begins at $100,000 but again, it can be upgraded to $300,000 or $500,000 for a small fee.

  • Medical expenses: Covers expenses others incur while on your property If they suffer bodily injury or property damage. Generally, the coverage is capped at $100,000.
  • Personal liability: This coverage provides coverage is someone is injured while on your property and extends your protection beyond your property limits … For example, this provision pays for accident or property damage for a family member at another location. Coverage usually begins at $100,000 but again, it can be upgraded to $300,000 or $500,000 for a small fee.

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Protecting Other Types of Homes

Homeowners insurance isn’t limited to people who own houses. People that live in condos, mobile homes, and even apartments can benefit from having an insurance policy. People can own condos and mobile homes, making them assets that are subject to liability. Those who rent spaces have belongings to protect and can sometimes be subject to liability.

Condo Insurance

This coverage is similar in scope to homeowner coverage, except that it is specifically written for those who own a condominium and covers a tenant’s personal property and personal liability while the Homeowners Association retains a policy that covers the building itself. It can be purchased as either actual cost or upgraded to include replacement cost. Condo insurance will:

  • Protect you from liability incidents such as a slip-and-fall accidents by visitors.
  • Cover your personal goods and valuables similar to homeowner’s coverage with the same restrictions on jewelry and art.
  • Generally includes limited additional coverage for debris removal, and damage to trees, plants and shrubs. It may also include credit-card coverage, which protects you if someone steals your credit card and makes unauthorized charges.

Mobile Home Insurance

Insurance policies for homes and mobile homes are very similar. This kind of policy is written specifically for a mobile home and has the same basic features for liability and dwelling protection. However, some of the optional features are very specific to a mobile home. Mobile home insurance will:

  • Protect you from guest accidents by covering the cost of medical expenses.
  • Cover your personal items in the event of theft or damage, excluding jewelry.
  • Optional features include coverage for the transport of your mobile home, and collision coverage in the event it gets hit.

Renters Insurance

This insurance is again similar in scope to homeowner coverage, except it is specifically written for those who rent a home or apartment and covers a tenant’s personal property and personal liability. It can be purchased as either actual cost or upgraded to include replacement cost. Renters insurance will:

  • Protect you from liability incidents such as a slip-and-fall accidents by visitors.
  • Cover your personal goods and valuables similar to homeowner’s coverage with the same restrictions on jewelry and art.
  • Generally, includes limited additional coverage for debris removal, and damage to trees, plants and shrubs. With some carriers, it may also include credit-card coverage, which protects you if someone steals your credit card and makes unauthorized charges.

 

Where Do I Start Comparing Homeowners Insurance Providers?

FAQs About Homeowners Insurance:

Do I have to have homeowners insurance? Unlike auto insurance, homeowners insurance isn’t required. However, if you use a mortgage to purchase your home, most lenders will require you to purchase a policy.

Is it better to buy direct or from an agent? If you want basic coverage, buying direct may be a good choice. However, working with an agent to obtain Homeowners Insurance is the best option if you:

  • Have different types of coverage with the same carrier because they usually offer discounts for “bundling.”
  • Have multiple structures on your property or work out of your home.
  • Live in an area prone to flooding or severe weather. In this case, a local agent is critical because of his or her knowledge of coverage limitations in your area.

How is my homeowner’s claim affected by actual cash value? You receive a payment in the event of damage, however it is based on depreciation of the damaged property.

What will NOT be covered on my homeowners insurance policy? Ordinances, flood, wear and tear, earthquake, war, nuclear hazards, and intentional damage. Some companies offer flood and earthquake protection through separate or add-on policies.

How is condo insurance different from homeowners insurance? Your unit is the only thing covered by your policy. Public spaces and the building itself are typically covered by the condo association and you have coverage for loss assessment.

Can my insurance provider cancel my policy if I have more than three claims? Your policy can’t be canceled before you renew your service. However if you have a bunch of claims, the company can cancel service at renewal.

Where Can I Get Homeowners Insurance?

Allstate

Allstate has provided customers with protection for unplanned events for more than 85 years. A.M. Best rates Allstate A+. With this rating, it seems Allstate policyholders truly are in “good hands” as their slogan suggests.

Allstate’s basic homeowners insurance policy includes the necessary dwelling, personal property and liability coverage. Optional coverage options include: water backup, scheduled personal property, business property, identity theft restoration, sports equipment, green improvement reimbursement, yard and garden, electronic data recovery, and musical instruments. Additional policies include flood insurance and personal umbrella insurance.

In addition to homeowners policies, Allstate also offers policies for condos, renters, mobile homes, and landlords. They all have basic features for personal property and liability and optional features specific to the policy type.

Nationwide

Nationwide started as a small mutual auto insurance firm. They have expanded to provide coverage for homes, and have been protecting assets for over 85 years. A.M. Best. gave Nationwide a rating of A+.

Nationwide’s homeowners policy includes dwelling coverage, personal property, and liability coverage. Additional coverage includes: replacement cost plus, water backup, valuables plus, other structures, ordinance or law, and earthquake. They also have policies for flood insurance and personal umbrella insurance.

Additional policies available are renters insurance and condo insurance, with basic liability and personal property coverages. Optional features can be added to the policies.

Progressive

Progressive has been pioneering the insurance industry and has been in business for 80 years. They began offering quotes online as the first insurance company to have a website. Progressive was first to have a mobile app as well.

While Progressive is innovative and offers competitive rates, they have had negative customer reviews. Despite this, A.M. Best gave them an A rating.

Progressive’s homeowners policy protects owners with dwelling, personal property, liability, medical payments and loss of use coverages. Additional features available for homeowners include: guaranteed replacement cost, inflation guard endorsement, scheduled personal property endorsement, increase limits on money and securities, secondary residence premise endorsement, watercraft endorsement, theft coverage protection, and credit card forgery. They also offer policies for mobile homes and flood.

Farmers

Farmers Group started business in 1928, protecting assets for over 80 years. They won the J.D. Power award for their call center’s customer service in 2007.  However, Farmers had some of the highest complaint rates. Farmers has an A rating with A.M. Best.

The basic homeowners coverage includes property damage, personal property, liability, medical payments and additional living expenses. The basic policy includes claim forgiveness and cosmetic damage. Optional coverage includes scheduled personal property and identity shield. Additional policies they offer are condo, mobile home, vacation home, earthquake and flood.

American Family Insurance

American Family Insurance started out as auto insurance firm in 1927. Today they offer many different types of insurance. They have an A rating with  A.M. Best.

American Family Insurance offers these protections for homes: homeowners insurance, backup and overflow coverage, personal property replacement, personal property coverage, office school and studio use, matching siding endorsement, personal injury coverage, identity theft protection, liability umbrella coverage. You can purchase a flood policy and American Family also has policies for renters, condos and manufactured homes.

State Farm

State Farm was  #1 in life insurance Customer Satisfaction in 2016, according to a JD Power survey. State Farm opened business in 1922, over 80 years ago. The company has the highest rating with A.M. Best, an A++.

Their homeowners insurance policy can cover damages due to weather, theft, vandalism, and accidents depending on your policy. Flood insurance is a separate policy you must buy if you need that protection. They also offer policies for condos renters, manufactured homes, farms,  and personal articles.

GEICO

You may know GEICO from its British gecko mascot. GEICO first opened in 1936 and has been in business over 80 years. They have an A++ rating from A.M. Best.

The basic coverage of GEICO’s homeowners insurance plan includes: property, personal property, personal liability. You can purchase additional coverage for jewelry. They also offer policies for condos, renters, mobile homes, landlords, and floods.

Liberty Mutual

Liberty Mutual has been in business over 100 years. They are a global company, offering commercial and personal protection. Liberty Mutual has a low complaint median for their size, and an A A.M. Best rating.

The standard coverage for the homeowners plan with Liberty Mutual includes: dwelling, personal possessions, liability, and additional living expenses. Additional coverages include: home protector plus, valuables, and inflation. They also offer these policies: renters, condo, landlord, mobile home insurance, flood, and umbrella coverage.

Travelers

Travelers is one of the oldest insurance companies, founded in 1864. They started by providing train passengers travel insurance. They now offer a huge range of products, including homeowners insurance. Travelers got an A+ rating from A.M. Best.

The basic Travelers homeowners plan includes: dwelling coverage, other structures coverage, personal property coverage, loss of use coverage, and liability insurance. Additional coverages include: special coverage for contents, contents replacement additional replacement, valuable items plus, personal articles floater, water back up, identity fraud, and green home coverage. However for other types of homes, they only offer policies for condos and renters. Flood insurance is a separate policy.

There are also state regional insurance companies. Be sure to research these companies as well. Research is key in finding the right service for your needs.

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