Understanding Your Homeowners Insurance Policy
Homeowners Insurance is a policy that covers both property and liability claims. Property claims are made when loss or damage occurs to your home or personal possessions. This coverage extends to possessions that you carry for personal use when you travel.
Liability claims arise when someone else suffers a bodily injury or damage to their property because of something you did or did not do. Liability claims may result in a lawsuit against you.
There are six types of homeowners insurance coverage that are designed to provide changeable amounts of protection. Insurance companies may title them differently, but the risk they insure are essentially the same.
Broad or Basic Policy
The Special Form covers your home against “all risks” except for certain specified exclusions, such as floods and earthquakes. This policy covers other structures (such as a garage) and all perils covered in the Broad Form, damage to or loss of personal property and comprehensive liability. Homeowners broad form includes;
- Fire or lightning
- Windstorm or hail
- Explosion
- Riot or civil commotion
- Aircraft
- Vehicles
- Smoke
- Vandalism or malicious mischief
- Theft
- Falling objects
- Weight of ice, snow or sleet
- Accidental discharge or overflow of water or steam
- Sudden and accidental tearing apart, cracking, burning or bulging
- Freezing
- Sudden and accidental damage from artificially generated electrical current
- Volcanic eruption
Special Homeowners Policy
This form covers your home against “all risks” except for certain specified exclusions, such as floods and earthquakes. This policy covers other structures (such as a garage) and all perils covered in the Broad Form, damage to or loss of personal property and comprehensive liability.
Tenants Broad Policy
If you rent a house or an apartment, insures your household contents, personal possessions, additional living expense, liability coverage and medical payments.
Comprehensive Policy
The Comprehensive Form insures a dwelling and personal property against all risks except certain specified perils such as floods and earthquakes. This is often the most expensive homeowners policy because it covers so many potential losses.
Homeowners Condominium Policy
It provides the basic coverage offered in the Tenants Form and provides special protection needed by owners of condominium units. It insures only the interior of the dwelling, not the structure itself.
Homeowners Actual Cash Value Policy
This policy is designed for older homes whose replacement cost would greatly exceed the market value. The policy stipulates returning the property to serviceable condition with commonly used materials.
Other Coverage Included in Your Homeowners Policy
Personal Liability
Personal liability provides coverage if you are legally liable for damages that are caused by you, a member of your family or a pet. You should read your policy to determine the dollar amount or your liability coverage. This limit may be increased for an additional premium.
Medical Payments
Homeowners and renters policies also include medical expenses, regardless of whether or not you were negligent, up to $500 per person and $25,000 per accident for injuries occurring in your home to anyone other than you or a member of your family. Medical payments cover injuries outside your home if they are caused by you, a member of your family or a pet. These limits may be increased for an additional premium.
Optional Coverage
Guaranteed Replacement Cost Coverage
100 percent replacement cost coverage is the most complete coverage for your home and/or its contents. To obtain this type of policy, you must meet underwriting rules and conditions of the company. This may include increasing the amount of your insurance on a monthly, quarterly or yearly basis to keep up with the inflation rate. Check with your insurance agent to determine if an additional premium is required and if exclusions or limits of liability apply.
Personal Article Floater
A personal article “floater” provides all risk coverage for possessions such as jewelry, furs, stamps, coins, antiques and other items that may exceed normal limits in your regular homeowners policy. A personal article floater itemizes each article, gives a description of the article insured and lists excluded perils.
Earthquake Insurance
Earthquake insurance is available through most insurance companies at an additional cost. It is normally issued as an endorsement and attached to your homeowners or fire policy.
Flood Insurance
The Federal Insurance Administration of the Federal Emergency Management Agency (FEMA) administers a program to make flood insurance available in flood prone areas. To qualify for flood insurance, your property must be located in a community or county that has agreed to the plan and land use control measures to reduce flooding.
