Frequently Asked Questions - Homeowners Insurance
How can I reduce my premiums?Are all homeowners policies the same?What types of property should I insure separately?I only rent. Why do I need homeowners insurance? |
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| • | Combine your coverages. Companies credit your insurance by as much as 10% for insuring both your auto and home. |
| • | Make sure you are receiving all of the discounts you deserve. Homeowners discounts are often available for:
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| • | Increase your deductible. The standard deductible is now $250, but a surprising number of people still carry a $100 deductible. Generally, you can save about 10% just by increasing a $100 deductible to $250. Of course, if you feel you can afford to absorb a higher deductible, you would save money by increasing it further. |
Are all homeowners policies the same?
Absolutely not. Homeowners coverage is designed to be customized to fit your needs and lifestyle. Most homeowners policies start with an "HO-3" coverage form, which is a standardized policy. Although this offers fairly broad coverage, there are many optional endorsements, most of which are quite inexpensive, which can fill coverage gaps. At a minimum, we recommend the following. You should consult with your agent to determine whether you have needs that are not properly addressed by a standard homeowners policy.
You may wish to purchase insurance through the car rental company in the following circumstances:
| • | Replacement Cost Contents Coverage, which settles loss on your personal property on a "new for old" basis, without any depreciation applied. |
| • | A pre-packaged Coverage Extension Endorsement. These vary by company, but often provide coverages such as: personal injury liability; food spoilage; backup of sewers or drains; and higher limits for tree debris removal. Many insureds were glad that they had this coverage during Hurricane Bob, the "washout" of October, 1996, and Ice Storm '98. |
| • | If your home is located in a flood plain, you should definitely consider flood insurance, as homeowners policies do not insure against flood, and cannot be endorsed to cover that peril. Even if your home is not in a recognized flood zone (as many of those damaged in October, 1996 were not), you can still purchase flood insurance, at a considerably lower cost. |
Be sure to ask your insurance agent about what coverages they recommend based upon your particular circumstance.
What types of property should I insure separately?
In order to keep costs reasonable for the majority of people, homeowners policies contain dollar or coverage limitations for certain classes of property. Other types of property are simply best covered on a form custom-designed for that type. If you have these types of property, you should consider "scheduling" them on a separate endorsement:
| • | Money, Securities, Coins, etc.; |
| • | Watercraft and trailers of any kind; |
| • | Jewelry, watches and furs; |
| • | Firearms |
| • | Fine Arts or Collectibles |
| • | Silverware, goldware, etc.; |
| • | Business property |
| • | Certain kinds of electronic apparatus designed for use in a vehicle and via battery. |
Computers are covered under a homeowners policy, but some choose to schedule them to cover perils otherwise excluded, such as power surge or mechanical breakdown.
There are four basic reasons for scheduling personal property:
| • | Broader coverage - typically, schedules are covered on an "open perils" basis, which extends coverage to such occurrences as losing a stone from a ring, or dropping a camera. |
| • | Lower or No Deductible - very often there is no deductible applied to scheduled personal property. |
| • | Preservation of Limits - by "pulling out" high-valued items, your contents limit remains unimpaired. |
| • | Establish proof of value and existence prior to a loss - because appraisals are generally required, the chance of a disagreement over value of the item is greatly reduced. |
I only rent. Why do I need homeowners insurance?
Insurance companies crafted a policy designed just for renters, known by the oxymoron "tenant homeowners insurance". It provides three important coverages, and often costs less than $150 per year.
| • | Contents insurance, protecting your belongings from damage by fire, theft, and many other perils, anywhere in the world. |
| • | Additional Living Expense, which pays for you to live somewhere else if your apartment is untenable due to a fire, hurricane, or other covered peril. |
| • | Liability and Medical Payments, which defends you and pays your legal liability for bodily injury or property damage. While we often think of landlords as the targets of liability lawsuits, tenants can be sued as well. The landlord's policy (assuming that one exits) will not protect you as a tenant of the building. |
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