FAQ
Homeowners Insurance
What are the different types of homeowners insurance?
There are four different types of homeowners insurance that companies offer. You have standard homeowners insurance. The standard homeowners policy(HO-3 or HO-5) is utilized for someone who is responsible for insuring the exterior and the interior of the structure that they live in. There is condo insurance(HO-6) for anyone who owns a condo or townhouse. Typically this insurance is used by someone who owns a home that is a part of an association, and the association is responsible for insuring part of the structure. Typically the association covers the exterior of the structure and particular features on the interior. The condo owner is responsible for insuring the features the association does not insure and their personal belongings that are in the condo/townhouse. Renters(HO-4) or tenant insurance is for someone who is either renting a home or apartment or a person who is living with a non-family member. Renters insurance provides coverage to your personal belongings at location where you are not the owner. The last type of homeowners insurance is dwelling fire or landlord(DP-1, 2, or 3) insurance. This coverage is utilized by someone who owns a home, condo, or townhouse and rents the location out to tenants. This policy offers coverage for the structure and allows you to pick the amount of coverage for the contents of the location.
How much coverage do I need to carry on my home?
If you carry a mortgage on your property, the bank will require you to carry enough coverage to either replace your home or cover the amount of the outstanding loan. Most of the time people will carry enough coverage to replace their home. Some banks require that you have the language “guaranteed replacement costs” on your policy.
Why is the insurance coverage on my home more than the value of my home?
Insurance companies typically make you insure your home at replacement costs. This means, based on the policy language after a loss, the insurance carrier is required to replace your home with “like kind material" and put you back into a similar situation that you were in before the loss. This takes into account the cost of building material and labor in your particular area. Insurance coverage has NOTHING to do with the market value of the home. Market value takes into account land value and other market factors which are of no concern to insurance carriers. Insurance carriers base their coverage on the type of policy language they offer in their contracts.
What does homeowners insurance cover?
Coverage A - Dwelling
Covers the physical structure of the home and any structure attached to the home. This coverage is used to determine the policy amounts for coverages B,C, and D.
Coverage B - Other Structures
Covers physical structures on the property that are not attached the home
Coverage C - Contents or Personal Property
Covers the personal property located on the property. If you take your home, flip it upside down, anything that can fall out would be considered personal property or contents.
Coverage D - Loss of Use or Additional Living Expense
This coverage is utilized when you have a loss and you need to live at another location while your primary home is being fixed or rebuilt
Coverage L - Liability
Covers you in the case when you have someone that is injured due to your negligence.
Coverage M - Medical Payments
This is the “Don’t sue me” coverage. You can utilize this coverage if someone other than a resident of the home, is injured on your property.
What is the difference between actual cash value and replacement costs?
An actual cash value takes into account the depreciation on the item in the loss. Your insurance carrier will figure out the cost of the item when it was new, subtract the amount of value that the item has lost and pay out the amount of value left in the item. A lot of insurance carriers are moving to this type of coverage on roofs after the roofs have reached 15 years of age. Insurance carriers got fed up with customers filing claims on their roofs after they had clearly gone past the life expectancy of the shingles.
What is the best way to save money on my homeowners policy?
There are four main factors used by insurance carriers to determine your homeowners premium. In most states, insurance carriers assign an insurance score to every prospect or client. The largest factor in determining an insurance is one’s credit score. The better your credit score, the better rate you be offered. After your credit score is taken into account, insurance carriers move onto loss experience. Most insurance carriers will take into account the previous 5 years and how many claims you have filed. The number of claims and the amount paid out will affect your insurance score. The more claims filed, the worse your score will be. The third characteristic are the updates that have been performed on your home. The four main updates that insurance carriers are concerned with are the roof, furnace, electrical system, and plumbing of the home. The newer those four items, the more discounts you will receive for having an “updated” house. That one has to do with how well the home is protected from losses. These items are: how close is the nearest fire hydrant, how many road miles is the responding fire department, security system, fire detection, water leak detection, temperature monitoring, back up generator, lightning protection, gated community, neighborhood security, and others.
Will quoting my insurance affect my credit score?
No. Even though insurance carriers utilize credit scores to apply insurance scores, when they access your score it is considered a “soft hit” and it does count as an inquiry when you take out a loan.
If I file a claim and not money is paid out, will it affect my rates?
Most carriers will not penalize you for filing a claim and then to find out that it is either not covered or the loss is under your deductible amount. However, depending on the carrier, you might lose discounts associated with being claims free or loss free. You should always discuss a claim with your agent before filing it with your insurance carrier. This way, your insurance agent can advise you on the possible repercussions of filing the claim. A claim does not need to be filed immediately after the loss. You do have time to discuss the loss, and work on getting your home fixed, before filing a claim.
Auto Insurance
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What is the difference between agreed value coverage and actual cash value?
How long will a ticket or accident last on my record?
Umbrella Insurance
What does umbrella insurance cover?
Why do I need umbrella insurance?
Valuable Articles Insurance
Why do I need valuable articles coverage?
Watercraft Insurance
What does watercraft insurance cover?