Home & Condo Owners Insurance
Do not rely on the purchase price of the home, the amount of the mortgage loan, or the amount set by the property tax appraiser. Your coverage should not be based upon what your home is "worth".
In order to be adequately covered, your home must be insured for the amount it will take to rebuild the home at current prices for building materials and labor costs, including the amount necessary to bring it into compliance with current building codes. If your home is underinsured at the time of a loss, there may be a penalty or reduction in the amount the insurance company will pay for the loss.
Homeowners' policies insure homes that are occupied by the owner. The policy consists of several main parts:
Property coverage helps pay for damage by covering perils to your home, the contents of your home and other personal belongings owned by you or family members who live with you. In some cases, it helps pay for damage to other structures, such as tool sheds, detached garages, small boats, guest houses and their contents.
Your policy provides limited coverage for some personal property, such as antiques, firearms, jewelry, furs and electronics. You may need additional coverage as an endorsement, or rider, to your insurance policy, to modify its original terms for an additional premium.
This coverage protects you against a claim or lawsuit resulting from (non-auto) bodily injury or property damage to others. For example, if a neighbor slips and falls in your house and sues you, and a jury finds you legally liable, this coverage would pay that claim plus legal fees up to the policy limits. This coverage applies to you and all family members who live with you.
It does not cover intentional damage or harm caused by you or family members who live with you.
Regardless of fault, this coverage pays for medical expenses, up to the medical payment limits, of persons accidentally injured at your home. It does not apply to your injuries or those of anyone living with you or to activities involving an at-home business. This coverage is a "good neighbor" type of coverage.
Additional Living Expenses (Loss of Use):
Homeowners' policies provide additional living expense coverage that will pay some extra expenses if damage to your home prevents you from living there while it is being repaired.
Most policies also will provide this coverage when a civil authority (law enforcement agency, emergency management service, etc.) prohibits the use of a residence due to direct damage to neighboring homes by a covered threat.
The items typically covered - above and beyond normal expenses - include extra costs for food, housing, telephone, transportation (to and from work or school), relocation and storage, utility installation and furniture rental for a temporary residence. Be sure to check your policy to find out what is specifically covered. This coverage applies only to differences in expenses. For example, it would apply to the cost of restaurant meals minus normal food expenses. It does not cover your mortgage, groceries and utilities or the monthly cost of a telephone in a rented space (since you normally pay for the telephone in your house).
Your policy may designate limited coverage for additional living expenses, but your policy does not obligate your company to pay this amount up front or in full if you suffer a total or partial loss. For this reason, you must keep receipts for additional living expenses and submit these to your company for reimbursement. Additional living expense coverage does not apply to your dependent children while they are away at college. It applies only to the primary insured structure in the event of a loss.
Condominium Unit Owners Insurance
Condominium-Unit Owners' Form (HO-6) covers property and certain items not insured by the association's policy. A condominium association may choose to cover some items in its policy, so make sure you are thoroughly familiar with its bylaws and policy to know what the association is responsible for.
Items that a condo association does not cover and that are covered under the "dwelling" portion of the policy (also known as Additions and Alterations):
- Floor, wall and ceiling coverings
- Electrical fixtures
- Air conditioning and heating equipment
- Water heaters
- Water filters
- Built-in cabinets and countertops
- Window treatments, including drapes, blinds and hardware replacement
- Air conditioning compressors that serve only one unit, no matter where they are located
Condo associations can also require unit owners to insure items such as front doors and screened porches. In addition, unit owners should continue to insure interior additions or upgrades which are not the same kind or quality as the original building items.
If an item is covered by both policies, the association's and unit owner's policy, then the association's policy pays first.
Also included on the policy are: Personal Property, Personal Liability, Medical Payments and Loss of Use.
Condo associations may assess individual unit owners for damages to the commonly owned areas that are not covered by the association's policy. Your unit-owner's policy may provide limited coverage for such a "loss assessment." An assessment by the condo association for the association's policy deductible isn't covered by your unit-owner's policy. The extent and amount of "loss assessment" coverage varies by insurance company.
This type of policy is sometimes referred to as a "Landlord's Policy". This policy is meant to cover a home that you own and rent out to others.
It provides coverage on the primary structure and other structures, liability and minimal personal property. The personal property coverage is to cover things like appliances that are in the home. It does NOT cover any of the tenants' personal belongings.
Typically, homeowners' policies exclude flood damage (rising water). Depending on your home's location, however, you may qualify for flood insurance through the National Flood Insurance Program. You also may qualify for a discount if you include a special elevation report with your application. The coverage involves a 30-day waiting period before the policy becomes effective; unless flood coverage is purchased at the same time you buy your home.
Please note: every address is in a flood zone, some may just be more high risk than others. Preferred Risk flood insurance can be purchased for under $350 a year and provide valuable coverage that is excluded from your home insurance policy! It is a small price to pay for peace of mind.
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