Homeowners insurance helps you protect one of your most important assets as well as the belongings in it. Let Pete Beckman Insurance navigate your homeowners insurance policy options and find affordable coverage for your family.
Homeowners Insurance and Coverage
Homeowners insurance provides financial protection for your home and belongings against unforeseen events such as fire, theft, certain natural disasters, injury, and more. A standard policy insures the home itself and the things you keep in it. Homeowners insurance covers both damages to your property and your liability or legal responsibility for any injuries and property damages you or your family cause to others. This can even include damage caused by household pets.
Although you can legally own a home without homeowners insurance, it is wise to invest in coverage. There are certain circumstances in which homeowners insurance isn't optional. If you have bought your home and financed the purchase with a mortgage, your lender will most likely require you to get homeowners insurance coverage. Lenders need to protect their investment in your home in case your house burns down or is severely damaged by a storm, tornado, or another disaster. If you live in an area likely to flood, the lender will most likely require you to purchase flood insurance. A lender may also put "forced-flood" coverage on your home, which may be considerably more expensive, and provides less coverage. Also, you will probably be required to buy homeowners insurance if you own a co-op or condominium.
Basic Coverage Policies
As you decide to either buy your first homeowners insurance policy or update your current one, it is best to familiarize yourself with basic coverage policies provided by insurance carriers. A standard homeowners insurance policy includes four essential types of coverage for the following:
- The structure of your home: A standard policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning, or other disasters in your policy. It will not pay for flood damage or routine wear and tear. It's important to buy enough coverage to rebuild your home.
- Personal belongings: Your furniture, clothes, sports equipment, and other personal items are covered if they are stolen or destroyed by fire, hurricane, or other insured disasters. This includes off-premise coverage, which means your belongings are covered anywhere in the world.
- Liability protection: You will be covered against lawsuits for bodily injury or property damage that you, family members, or even pets cause to others. It also provides no-fault medical coverage, which means if a friend or neighbor is injured in your home they can submit medical bills to your insurance company up to the limit of coverage.
- Additional living expenses: The additional cost of living away from home if you can't live there due to damage from a fire, storm, or other insured disasters will be paid. It covers hotel bills, restaurant meals, and other living expenses incurred when your home is being rebuilt or repaired.
Other Policy Options
Outside of the standard homeowners insurance coverage options listed above, there are different options for homeowners and renters, as well as additional coverage add-ons. The different types of homeowners policies are fairly standard throughout the country; however, individual states and companies may offer policies that are slightly different or go by other names, such as "standard" or "deluxe."
Policies If You Own Your Home
If you own the home you live in, you have several policies to choose from. The most popular policy is the HO-3, which provides the broadest coverage. Owners of multi-family homes generally purchase an HO-3 with an endorsement to cover the risks associated with having renters live in their homes.
- HO-1: Limited coverage policy. This "bare bones" policy covers you against the first 10 different disasters—fire or lightning, windstorm or hail, explosion, riot or civil commotion, damage caused by aircraft, damage caused by vehicles, smoke, vandalism or malicious mischief, theft, and volcanic eruption. It's no longer available in most states.
- HO-2: Basic policy. It protects your home from all 16 different disasters, which your policy will specifically name for you. In addition to the 10 disasters previously listed, an HO-2 policy also covers you against the following: falling objects;the weight of ice, snow, or sleet; accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance; sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system; freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance; and sudden and accidental damage from an artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component). There is also a version of HO-2 designed for mobile homes.
- HO-3: The most popular policy. This "special" policy protects your home from all perils except floods, earthquakes, war, nuclear accident, landslides, mudslides, sinkholes, and others specified in your policy.
- HO-8: This policy is designed for older homes and usually reimburses you for damage on an actual cash value basis usually at market value. Full replacement cost policies may not be available for some older homes.
Policies If You Rent Your Home
As a renter, you do not have as many policy options as a homeowner, but these policies still protect your possessions and any structural parts you may own.
- HO-4: This policy may be referred to as simply "renter's insurance" and was created specifically for those who rent the home they live in. It protects your possessions and any parts of the apartment or home that you own, such as new kitchen cabinets you install. You are protected against the 16 possible disasters listed in the HO-1 and HO-2 policies.
- HO-6: Serves as a policy for those who own a condo or co-op and provides coverage for your belongings and the structural parts of the building that you own. It also protects against all 16 disasters listed in the HO-1 and HO-2 policies.
The Importance of Taking Home Inventory
Homeowners insurance doesn't merely cover your physical home; it also insures your belongings within the home. Would you be able to remember all the possessions you've accumulated over the years if they were destroyed by fire? Having an up-to-date home inventory will help you get your insurance claim settled faster, verify losses for your income tax return, and help you purchase the correct amount of insurance.
To create a home inventory, start by making a list of your possessions, describing each item and noting where you bought it and its make and model. Clip to your list any sales receipts, purchase contracts, and appraisals you have. For clothing, count the items you own by category (e.g., pants, coats, shoes) making notes about those that are especially valuable. For major appliance and electronic equipment, record their serial numbers usually found on the back or bottom of the product. Here are some home inventory tips to help get you started:
- Don't put it off any longer. If you've been in the same house for years without an inventory, then start with recent purchases and try to remember what you can about older possessions.
- Valuable items like jewelry, artwork, and collectibles may have increased in worth since you received them. Check with your agent to make sure that you have adequate insurance for these items.
- Take pictures of rooms and important individual items. On the back of the photos, note what is shown and where you bought it or the make of the item.
- Use technology to create an inventory easily. Record a video walkthrough of your house or apartment describing the contents. You can also use your computer to make your inventory list, and personal finance software packages often include a room-by-room inventory program.
Whatever form of documentation you choose, it is essential to keep your home inventory along with the receipts safe. Safeguard your inventory list in your safe deposit box or at a friend's or relative's home. This assures you'll have something to give your insurance representative if your home is damaged. When you make a significant purchase, add the information to your inventory while the details are fresh in your mind.
Contact Us for a Quote
The seemingly endless choices for homeowners insurance policies can be overwhelming, but Pete Beckman Insurance is here to ease that choice. We will help you assess your needs according to your lifestyle and belongings. Please contact us today for a free homeowners quote, and we will begin working to help you find the protection you deserve.