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Homeowners Insurance
Part 1 - Policy Overview
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There are literally hundreds of variations of Homeowners Insurance Policies out there. Most policies from major insurance companies like Farm Bureau are generally laid out the same way, so we'll focus on that common type of policy here. Just like with auto insurance, the main part of the Homeowners Policy that lays out and defines your coverages is called the "Declaration Page". This is typically the 1st page of your policy (other than possibly a cover letter of some sort). The Declaration Page will break down your coverage into categories such as: -Dwelling -Other Structures -Personal Property -Liability -Medical Payments to Others Lets take a look at each of the above coverage types and see what they mean...
Dwelling This coverage refers to the total amount of protection you have in the event of damage or total loss to the home (also referred to as the dwelling) itself. When you look at the total dollar figure indicated under Dwelling Coverage, you are looking at the total amount that would be paid out in the event of a complete loss of the structure. For example, $150,000 in Dwelling Coverage means that if your home were completely destroyed by fire, windstorm, etc., you would be paid $150,000 to rebuild your home. More often than not, when a claim is filed under a Homeowners Policy, the amount of loss is substantially less than the full coverage amount. For example, a hailstorm comes through and causes damage to the roof. In this type of situation, the claim may only be worth $2,000 to $3,000, which is the amount that would be paid to the insured (less the applicable deductible, which we'll talk about in part 5).
Other Structures This coverage refers to the total amount of coverage that you have in the event of damage or total loss to "other" or "detached" structures such as storage sheds, detached garages, carports, playscapes, etc. The amount of coverage for "Other Structures" is usually calculated at 10% of the Dwelling Coverage amount. In other words, a policy with $150,000 in Dwelling Coverage would typically have $15,000 in "Other Structures" coverage. This amount can be increased if necessary, and the corresponding increase in premium is very minor.
Personal Property This refers to the amount of coverage that you have in the event of damage, theft, or total loss to any and all of the contents of your home. This coverage extends to your belongings no matter where they are in the world. For example, if you bring your laptop and several suitcases full of clothing, etc., on a trip, those items are covered 100% by the Personal Property coverage of your homeowners policy. Another little known fact about Personal Property coverage is that it also extends to the personal items in your car. Auto theft coverage only protects you from the loss of your vehicle, not anything inside of it (other than the things built into the car like the stereo, etc.). Any other property that may be inside of the vehicle (laptop computer, portable GPS device, bags of Christmas presents, etc.) is protected by your homeowners insurance under Personal Property coverage! If you have a lot of valuable jewelry (i.e., a wedding ring), you may want to look at securing additional coverage for these types of items. Many policies will limit a single jewelry loss to as little as $500 after deductible. Most policies also don't include "mysterious disappearance" (plain ol' losing it) when it comes to jewelry. A "Personal Articles Floater" is a very nice piece of coverage to have on jewelry. It even covers losing a single stone out of a ring while you're working in the yard, washing dishes, etc. Such a plan is available for as little as $1.50 per hundred dollars of coverage (i.e., $150 per year for a $10,000 ring) and you pay no deductible in the event of a loss!
Liability This refers to the amount of coverage that you have in the event that you are sued and held liable for damage or injury to another person and/or his or her property. The beauty about this coverage, like personal property, is that it follows you wherever you go in the world! If you and your son are over at a neighbors playing softball - and little junior knocks one straight through another guy's plate glass window - guess what - you're covered under the liability section of your homeowners policy! Another important point about liability coverage, on a Farm Bureau policy anyway, is that we pay for your legal defense above and beyond the Liability limits of the policy. So, if you have $100,000 in Liability Coverage and a judgement is entered against you for the entire coverage amount, don't worry about the $8500 in legal fees - we'll cover that for you!
Medical Payments to Others This refers to the amount of coverage that you have in the event that someone is injured on your property and goes to a doctor or hospital for medical treatment. As this coverage is often closely tied-in with your Liability coverage, we'll often pay for the balance of a medical claim out of your liability coverage if the actual amount exceeds the medical payments limit of your policy.
Now that we've taken a look at what the different types of coverages are, let's take a look at what causes of loss are covered in Part 2... Part 2 - What Causes of Loss Are Covered? Part 3 - How Much Coverage Do I Need? Part 6 - What Goes In To Quoting A Policy? |
