Homeowner Insurance FAQ's

Following are a few questions and answers which are often asked about insurance coverage for your home and property, that we hope will be helpful. If what you are looking for is not here, please contact your agent who will be able to provide you the answers you are seeking.



What coverage do I need?
Making the decision as to what coverage you need, will first require you to identify and evaluate what property you own that you want to protect. If you own or are buying your home, you will want to protect yourself from financial disaster, should the home sustain a severe fire or other property loss. When you purchase a home you are undertaking a huge financial investment that can be at risk for natural disasters such as hurricanes, floods, tornados and earthquakes. Should a major storm blow down a large tree causing it to fall on your home and damage the roof, it would be an unexpected expense for you as the owner of the home to remove the tree and make the repairs.

Along with the homes that we purchase, we have all of our personal furnishings inside of the home, such as furniture, clothing, linens, kitchen utensils, pictures, books, etc. If we have to replace all of the property that we own that is inside of our homes because it was destroyed by a fire or other type of damage, we probably would not even be able to identify everything we had in the home, prior to the loss.

Your need for coverage is best described as "how much you can afford to lose".

• Could you afford to replace all of your personal furnishings inside of your home without taking out a loan?
• Would you be able to list and identify everything you have in your home, if it was destroyed and you had nothing to look at or refer to?
• Could you itemize what all of your personal furnishings cost you and the approximate date when you acquired it, without looking at the receipts?
• Do you have any special items such as collectors' items or antiques handed down to you from your grandparents? Have you had them appraised? What would it cost to replace them? Do you know what they are valued at?
• Do you have an in home business?
• Do you have property that you use in your business in your home?
• Property can be damaged by humans through theft and vandalism.
• Catastrophic events such as Fire and Tornadoes can cause damage to your property.

• Identify all property at risk
• List all property at risk
• Determine the value the property at it's purchase price and the cost to replace it. Get current appraisals if necessary.
• Take pictures and videos of all of your property at risk for safekeeping. These can be used to help identify your property after it has been damaged or destroyed. Remember to keep these in a safe place, outside of the home, i.e. safe deposit box, your insurance agent's office, etc.

• Do you own and live in a Condominium Unit? If so, you would need the Homeowners Condo Policy which is designed specifically for Condo unit owners. It provides coverage for the inside walls of the condo, which you have purchased, as well as any assessment fees, that the association may levy against you.
• Do you own and live in a Townhouse? As owner of the townhouse are you also a member of the townhouse association? Do you pay a fee to the association as your participation in the maintenance of the common areas of the community? If so that the townhouse is your primary residence, you should purchase the Homeowners Policy that provides coverage for the building, any other buildings you own on the property such as storage sheds, garages etc, as well as your personal furnishings and other property that is located inside of the home or other buildings.
• If you do not own the home you live in and rent it from the owner, you should purchase a Homeowners Renters Policy which provides coverage for all of your personal furnishings in the home, but there is no coverage for the building itself, which it not your risk.
• If you live in an apartment that you rent from the owner of the building, you should purchase a Homeowners Renter Policy which provides coverage for all of your personal furnishings in the home, but there is no coverage for the building itself, which it not your risk. The building may also be managed by a property management firm, and in this case, the Renters Policy is still the correct form for you to purchase.

How much coverage do I need?
When evaluating your property, you need to determine what would be the dollar amount that would be needed to replace your property. The Replacement Cost of property that was purchased several years ago may be different today than when you originally purchased it. The Actual Cash Value is the replacement value after a deduction for depreciation is calculated. You should start with the Replacement Cost first to determine what it would actually take to replace the property if it is destroyed.

Once you have determined what it would take to actually replace your property, you can then determine if you want to have coverage that will completely replace the property or allow for depreciation which is provided at a lower premium rate than Actual Cash Value.

Most Homeowners policies will provide coverage on the home itself on a Replacement Cost basis since buildings rarely depreciate. This is not true however of personal property. Since it depreciates as soon as we have purchased it, most personal property is covered on an Actual Cash Value basis, which allows for depreciation. You can purchase the Replacement Cost coverage for your personal property, but it will come with a higher premium than the Actual Cash Value.

Determining how much coverage you need, depends on how well you evaluate your property including it's values. With regards to personal property, you should check in the local shopping malls to learn what the prices are in today's dollars to replace the personal property you purchased 5 to 10 years ago.



I bought my home for $ 350,000 2 years ago, but my Homeowners Policy indicates that the coverage for my home is $ 275,000. Why isn’t my Homeowners policy covering the entire value?
The purchase price of your home at $ 350,000 was the market value which is not the same as the replacement value. Replacement Value is what it is going to cost to actually repair or replace the actual structure. Lumber, Drywall, Insulation, Concrete, and other building supplies are the factors used to determine the actually building value. The size of the structure is also a factor in determining how much building supplies will be needed.



During Isabel, my basement was flooded but my homeowners insurance company said my policy didn't cover flood. Why not?
Damage done by flood is not covered under the standard Homeowners policy. Flood coverage is purchased separately from the National Flood Insurance Program. The Federal Government underwrites the coverage and pays the claims.



Can I add Flood Coverage to my Homeowners policy?
Flood Coverage cannot be added to the Homeowners Policy. It is issued as a separate policy through a NFIP- National Flood Insurance Program that is managed through the Federal Emergency Management Agency (FEMA). Flood coverage may be purchased through an insurance agent directly from the NFIP or an insurance company that participates in the NFIP Program.



Recently my hot water heater burst and flooded by basement. Would that have been covered by a flood policy?
Flood coverage would not have covered the damage done by your burst water heater. If you had a Homeowners policy, it probably would have covered the damage done by the water that resulted from the sudden broken pipes and burst water heater. It would not however, covered the cost of the pipes or the water heater.



I have Backup of Sewers and Drains on my homeowners policy. Does it cover Flood Damage?
The endorsement that covers Backup of Sewers and Drains is designed to cover damage done when sewers and storm drains are backed up and water and other waste comes back into your home. The endorsement does not cover Flood damage which is damage caused by an overflow of inland or tidal waters or unusual and rapid accumulation or runoff of surface water from any source, unless general flooding exists.



I own a duplex and rent out the upstairs apartment. Can my tenant be covered under my Homeowners Policy?
Your Homeowners Policy will not provide coverage for your tenant. It is designed to provide coverage only for you as the homeowner. Your tenant should purchase a Renters policy for his property.



My home was broken into by a thief and some of my jewelry was stolen. The insurance company wouldn't pay for all of it and said there were limitations on my policy for stolen jewelry. Should I have purchased a different type of policy to cover the stolen jewelry?
A Homeowners Policy will provide coverage for the theft of jewelry, but there is a limitation at a set limit, normally $ 2,000. You can provide coverage for jewelry or other personal property that is valued at higher than that limit, by scheduling the individual pieces of jewelry or other property with the value indicated that you want coverage for. The schedule can be added to your homeowners policy, or you can purchase a separate policy if you choose. The separate policy is called a Personal Articles Floater.

I have a pet named Slinky. He is a Boa Constrictor, but kept in the cage at all times. Why does my insurer want to exclude him?
Although Slinky may be a very good pet for you, apparently your insurer does not have the same affection for him. They are probably concerned that someone will be injured by him and have elected to exclude him from coverage. They certainly have that option and if you still want coverage for him, you can purchase Animal Mortality coverage in the event Slinky is killed accidentally. You may also shop around for Liability coverage for him to protect you should he get out of the cage and injure or kill someone.

These are some or the items you might consider in researching coverage for your home. Discuss any specifics that we have included or others with your agent who is trained to assist you in making important decisions about protecting your home and property.