Home Insurance FAQ
1. What affects home insurance prices?
2. What does "property damage" cover?
3. What does "contents insurance" coverage include?
4. What does "additional living expense" or "loss of use" cover?
5. What Is "personal liability insurance" coverage?
6. What does "medical payments insurance" cover?
7. What is "replacement cost"?
8. What is "actual cash value"?
9. What damage to my house would not be covered by my homeowner's policy?
10. How will I be able to recall the contents of my home if it is destroyed?
Solutions
1. What affects home insurance prices? [Back to Top]
Type of Construction: Frame houses usually cost more to insure
than brick.
Age of House:New homes may qualify for discounts. Some insurance
companies offer limited coverage or may not insure older homes.
Local Fire Protection: The number of fire hydrants and fire departments
and the availability of water are just some factors which determine your
area's fire protection class. If you reside in an area without fire protection,
you will pay more for fire insurance.
2. What does "property damage" cover? [Back to Top]
Property damage coverage helps pay for damage to your home and personal property caused by such perils as fire, lightning, windstorm or hail. The perils of flood and earthquake are not covered. If you believe you need flood insurance and your insurance company will not provide it, you may obtain coverage through the Federal government's National Flood Program ("NFP"). To learn more about the NFP you can contact an insurance agent. You should carefully read your policy before you have a loss to determine exactly what types of losses will be covered.
3. What does "contents insurance" coverage include? [Back to Top]
In general, the contents of your home and other personal belongings owned by you or family members who live with you will be covered under the policy in an amount equal to 50% of the limit of liability carried on your dwelling. However, high valued personal property such as jewelry and cameras should be scheduled on the policy so that you are adequately protected to avoid the possibility of these items not being fully covered at the time of loss.
4. What does "additional living expense" or "loss of use" cover?
[Back to Top]
Most home insurance policies provide for the necessary increase in expenses you incur if your home is damaged by an insured event and you cannot live there while repairs are being made or if you are denied access to your home by government order. The coverage is generally subject to duration limits and commonly covers any expense incurred by you so that your household can maintain its normal standard of living. In some instances, this coverage may include the costs of a motel, eating in a restaurant, or storing some of your property.
5. What Is "personal liability insurance" coverage? [Back to Top]
Personal Liability Coverage protects you and all family members who live with you against a claim or lawsuit resulting from (non-auto and non-business) bodily injury or property damage to others and for which you become legally obligated to pay. Defense costs are included, but the insurance company has no duty to defend you after the limit of liability on the policy has been exhausted.
6. What does "medical payments insurance" cover? [Back to Top]
Regardless of who is at fault, this coverage pays the reasonable expenses for others accidentally injured on your premises or the areas immediately adjoining your property such as sidewalks or alleys. Medical Payments Coverage does not apply to your own injuries or those of family members living with you or injuries arising out of activities involving a business that you operate out of your home, your intentional acts, or arising out of the rental of your premises.
7. What is "replacement cost"? [Back to Top]
Replacement Cost is the amount necessary to replace or rebuild your home or repair damages with materials of similar kind and quality without deducting for depreciation. (Depreciation is the decrease in the home's value since the time it was built because of age or wear and tear.)
8. What is "actual cash value"? [Back to Top]
Actual Cash Value usually means the sum of money required at the time of the loss to repair or replace the property destroyed, less an amount for depreciation. Actual Cash Value equals the replacement cost less depreciation. Most standard home insurance policies cover the contents of your home (i.e., personal belongings) on an actual cash value basis, but it is possible to purchase replacement cost.
9. What damage to my house would not be covered by my homeowner's policy? [Back to Top]
It depends on the type of policy you own. But in general,unless you buy additional coverage, you won't be compensated for losses due to floods, earthquakes, nuclear accidents, wars, intentional damage, and normal wear and tear. Call your insurance agent, other exclusions may also apply.
10. How will I be able to recall the contents of my home if it is destroyed? [Back to Top]
It's wise to generate a detailed list of your possessions. Making a video or photographic record of your possessions is advisable, as well. You may want to consider storing your inventory in a safe-deposit box off your property, or at least in a lockable fireproof storage box in your home. Not only will a record of your possessions take most of the guesswork out of filing a claim, police say such documentation can help you prove ownership in case your belongings are recovered from a thief. Also, you may want to videotape or photograph the mess after a disaster and before you begin the cleanup. This can help you prove the extent of damage without having to wait to get your life back in order. Always contact your insurance agent and your insurance carrier before any claim is filed and before any clean-up is performed.
11. What can I do about expensive possessions, like jewelry and camera equipment, that are far more valuable than the coverage limits of my homeowner's policy? [Back to Top]
You can purchase additional coverage, through an endorsement to your existing policy or with a separate policy, to extend the limits of coverage for specific items. Talk with your insurance agent.
