Keeping Costs Down
The cost of your homeowners insurance can vary markedly depending
on such factors as the size, quality, and location of your home;
the coverage you select; and the company who writes your insurance.
With these factors in mind, consider implementing the following
tips to keep your homeowner’s insurance costs down.
Shop around
Shopping your insurance may save you significant numbers of premium
dollars. Why? because many companies specialize in specific types
of homeowner’s coverage, and, therefore, offer lower premiums
for those particular coverage than you would pay for the same coverage
with a different company. Shopping your insurance gives you the
opportunity to locate such companies.
As you shop, consider saving yourself both time and money by calling
an independent agent, like those at Hartley Insurance, who can often
obtain multiple insurance quotes for you from a variety of reputable
companies, simultaneously.
Finally, keep in mind that there is a down side to shopping your
insurance. Changing your insurance frequently may cost you the loyalty
of your agent: like your time, your agent’s time is limited.
So, he or she is most likely to devote his or her best efforts to
loyal clients. In addition, changing insurance companies frequently
will likely cause you to forfeit discounts and perks that many companies
offer only to their long-term clients.
Increase your deductible
Increasing your deductibles from $250 to $500, or even $1000, can
save you a substantial number of premium dollars. Additionally,
paying smaller claims yourself allows you to earn or retain money-saving,
claims-free discounts offered by many insurance companies.
Of course, higher deductibles also mean higher out-of-pocket expenses
at claim time, too. So, consider whether or not you are financially
positioned to absorb higher up front costs before raising your deductibles.
Consider the cost of insurance before you buy a home
Considering the increased premium cost associated with specific
characteristics of a given home can save you significant numbers
of premium dollars. Before you buy, for example, consider the increased
insurance costs associated with homes that are older, in poor condition,
or those located in rural areas, flood zones, or earthquake zones.
Doing so will likely save you both money and frustration in the
long run.
Seek other possible discounts
In seeking discounts ask your agent about those discounts available
for installing security devices in your home or for updating an
older home. Your agent is likely your best resource for identifying
and securing applicable discounts.
In addition, keeping your home safe and in good repair will likely
have a positive impact on your homeowner’s insurance costs.
Consult your agent
Your licensed agent is best equipped to advise you regarding your
individual coverage needs and available discounts. So, we strongly
recommend that you select a reputable and competent agent to advise
you with regard to your insurance needs.
Safety tips
Observing the safety tips provided below will assist you both in
avoiding unnecessary frustration and inconvenience as well as in
controlling your homeowner’s insurance premiums.
• Keep your home secure 
• Keep your swimming pool safe
• Barbecue safely
• Keep your bike from being stolen
• Avoid dog bites
• Enjoy the winter safely
Home security
Burglars won't find your home an "easy mark" if they
are forced to work in the light, if they have to take a lot of time
breaking in, or if they can't break in without making a lot of noise.
Research shows that if it takes more than four or five minutes to
break into a home, the burglar will go elsewhere.
Most insurance companies provide 2% to 15% discounts for devices
that make a home safer -- dead-bolt locks, window grates, bars and
smoke/fire/burglar alarms.
When improving the security of your home, don't exchange security
for personal safety. Don't make your home such a fortress that you
are unable to escape in case of a fire or other emergency.
Check your home for weaknesses and correct them
1. Take the time to "case" your house or apartment, just
as a burglar would. Where is the easiest entry? How can you make
it more burglar-resistant?
2. Trim trees and shrubs near doors and windows, and think carefully
before installing a high, wooden fence around your back yard. High
fences and shrubbery can add to your privacy, but privacy is a burglar's
asset. Consider trading a little extra privacy for a bit of added
security.
3. Force any would-be burglar to confront a real enemy -- light.
Exterior lights and motion detectors, mounted out of easy reach,
can reduce the darkness a burglar finds comforting.
4. Simple security devices -- nails, screws, padlocks, door and
window locks, grates, bars and bolts -- can increase the amount
of time it takes to break into your home.
5. Invest in a burglar alarm. The most effective ones also ring
at an outside service.
6. Are any of your valuables -- paintings, a silver collection or
a computer -- easy to see from outside? Rearranging your furnishings
might be advisable if it makes your home less inviting to criminals.
Simple security steps
1. Doors
Make sure you have strong doors. Outside doors should be metal or
solid hardwood, and at least 1 3/4 inches thick. Frames must be
made of equally strong material, and each door must fit its frame
securely. Even the most efficient lock, if it is placed in a weak
door, will not keep out a determined burglar.
A peephole or a wide-angle viewer in the door is safer for identifying
visitors than a door chain.
Sliding glass doors present a special problem because they are easy
to open, but there are locks designed for them. A broomstick in
the door channel can help, but cannot be depended on.
2. Locks
Deadbolt locks are best. They usually are locked with a key from
the outside and a thumb turn on the inside. The cylinder (where
the key is inserted) should be pick-resistant. Ask your hardware
dealer for a reputable brand or buy your locks from a locksmith.
3. Windows
Key locks are available for all types of windows. Double-hung windows
can be secured simply by "pinning" the upper and lower
frames together with a nail, which can be removed from the inside.
For windows at street level or on fire escapes, consider installing
metal accordion gates.
Home security habits
1. Establish a routine to make certain that doors and windows are
locked and alarm systems are turned on.
2. Avoid giving information to unidentified telephone callers and
announcing your personal plans in want ads or public notices (such
as giving your address when advertising items for sale).
3. Notify the police if you see suspicious strangers in your area.
4. Don't carry house keys on a key ring bearing your home address
or leave house keys with your car in a commercial parking lot or
with an attendant.
5. Don't hide your keys in "secret" places outside your
home -- burglars usually know where to look.
Vacation tips
1. Leave blinds open in their usual position.
2. Have mail and packages picked up, forwarded or held by the post
office.
3. Lower the sound of your telephone ringer and answering machine
so they can't be heard outside.
4. Arrange to have your lawn mowed in summer and your walk and driveway
shoveled in winter.
5. Stop newspaper deliveries.
6. Ask a friend to pick-up "throw-away" newspapers and
circulars.
7. Use automatic timers to turn lights on and off in various parts
of the house at appropriate times. Consider connecting a radio to
a timer.
8. Tell police and dependable neighbors when you plan to be away
and join with your neighbors to keep a close watch on what's happening
in your area -- working closely with them is a good way to prevent
crime.
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Pool safety
Every year about 43,000 people are injured in and around swimming
pools and more than 600 people drown in home or public pools. Half
of the pool fatalities occur in the yards of single-family homes.
Here are some pool safety tips you should follow
1. Never leave small children unsupervised ñ even for a
few seconds.
2. Put fencing around the pool area to keep people from using the
pool without your knowledge.
3. Keep children away from pool filters, as the suction force may
injure them or prevent them from surfacing.
4. Be sure all pool users know how to swim. Learners should be accompanied
by a good swimmer.
5. Donít swim alone or allow others to swim alone.
6. Check the pool area regularly for glass bottles, toys or other
potential accident hazards.
7. Keep CD players, radios and other electrical devices away from
pools or nearby wet surfaces.
8. Donít allow anyone who has been drinking alcohol to use
the pool.
9. Stay out of the pool during rain or lightning storms.
10. Never dive into an above-ground pool and check the water depth
before plunging into an in-ground pool. Keep clear of the area near
a diving board.
11. Don't swim if you're tired or have just finished eating.
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Grilling safety
Americans enjoy more than three billion barbecues each year. But
barbecuing can be dangerous or even deadly if you are not careful.
The following tips can make your grilling experience safer:
1. When ready to barbecue, protect yourself by wearing a heavy apron
and an oven mitt that fits high up over your forearm.
2. With gas grills, make sure the gas cylinder is always stored
outside and away from your house. Make sure the valves are turned
off when you are not using them. Check regularly for leaks in the
connections using a soap and water mix that will show bubbles where
gas escapes.
3. Barbecue grills should be kept on a level surface away from the
house, garage, landscaping, and most of all, children.
4. For charcoal grills, only use starter fluids designed for those
grills. Never use gasoline and use a limited amount of starter fluid.
If the fire is too slow, rekindle with dry kindling and add more
charcoal if necessary. Never add more liquid fuel or you could end
up with a flash fire.
5. Be sure to soak the coals with water before you put them in the
trash.
6. Always remember that grills remain hot long after you are through
barbecuing.
In case of an emergency
If you get burned, run cool water over the injury for 10 to 15 minutes.
Never put butter or salve on burns because they will seal in the
heat and cause further blistering. If you receive a serious burn
the sooner you get medical attention the better.
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Protecting your bike from theft
The National Bike Registry estimates that one million bicycles
are stolen each year in the U.S. and only a small percentage of
them are ever recovered. The annual cost to American families is
more than $200 million.
The following tips can help lower the risk of having your bike
stolen:
1. Lock your bike.
Unlocked bicycles are an open invitation for thieves. Whenever you
are not riding your bike, it should be locked, even when itís
in your garage.
2. Don't skimp when buying a lock.
Most cable locks are easy to cut, so purchase the best lock you
can afford.
3. Lock your bike correctly.
Lock both wheels and the frame to a post, pole or bike rack.
4. Register your bike with local police.
The police are able to recover bikes quickly if they are registered
in advance and have the appropriate information including make,
model, color and serial number. You can also register your bike
with the National Bike Registry, a national database which helps
recover stolen bikes.
Bicycles are covered under your homeowners or renters insurance.
However, there is usually a $250 - $500 deductible. Your homeowners
or renters policy also provides liability coverage in the event
of a collision that results in injury to another person. There are
no deductibles for liability claims.
Once you purchase a bicycle, keep the receipt for it and any accessories
you add. Also, take photographs of the bike. Store these documents
off-premises and alert your insurance professional to your new purchase.
If you own an expensive bike, consider purchasing a floater. This
will provide more coverage than a homeowners or renters policy.
For instance, in the event of an accident, a floater covers the
cost of bike repairs. A floater costs approximately $9 for every
$100 of the bike's value and there are no deductibles.
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Dog bite liability
According to the Centers for Disease Control and Prevention, there
are approximately 4.7 million dog bites per year. These bites cost
over $1 billion, with the property/casualty insurance industry paying
roughly $310 million in 1999, about 20% of total homeowners insurance
liability payouts.
Homeowners and renters insurance policies typically cover dog bite
liability. The following tips can help reduce the chances of your
dog biting someone:
1. Have your dog spayed or neutered. These procedures will greatly
reduce the likelihood that the dog will bite.
2. Socialize your dog so that it knows how to act with other people
and animals.
3. Play non-aggressive games with your dog such as "go fetch."
Playing aggressive games like "tug-of-war" can encourage
inappropriate behavior.
4. Avoid exposing your dog to situations in which you are unsure
what the dogís response will be.
Insurers may charge more for certain breeds of dogs. The following
purebreds have been responsible for the greatest number of dog bite-related
fatalities over the 20 year period, 1979 to 1998, according to the
Center for Disease Control & Prevention (CDC - http://www.cdc.gov ). The breeds are listed in declining order of fatalities:* "Pit
Bull"
• Rottweiler
• German Shepherd Dog
• "Husky"
• Malamute
• Doberman Pinscher
• Chow Chow
• Great Dane
• Saint Bernard
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Winter weather preparation
Ice, snow and wind can have devastating consequences on your home.
The time to winterize is when the leaves begin to turn and not when
the snow begins to fall.
Homeowners should take the following precautions:
1. Maintain gutters.
Remove leaves, acorns, sticks and other debris from gutters, so
melting snow and ice can flow freely. This can prevent ice damming
a condition where water is unable to properly drain through the
gutters and instead seeps into the house causing water to drip from
the ceiling and walls. You may also consider installing "gutter
guards." Available in most hardware and home stores, gutter
guards are screens that prevent debris from entering the gutter
and direct the flow of water away from the house and into the ground.
2. Trim trees and remove dead branches.
Ice, snow and wind can cause weak trees or branches to break ñ
damaging your home, car or injuring someone walking on your property.
3. Check insulation.
Add extra insulation to attics, basements and crawl spaces. If too
much heat escapes through the attic it can cause snow or ice to
melt on the roof. The water re-freezes causing more snow and ice
to build up. This can result in a collapsed roof, and can contribute
to ice damming. Ideally, the attic should be five to ten degrees
warmer than the outside air. Well-insulated basements and crawl
spaces will also help protect pipes from freezing.
4. Maintain pipes.
Wrap pipes with heating tape and insulate unfinished rooms such
as garages that frequently have exposed pipes. Also, check for cracks
and leaks. Have them repaired immediately to prevent much costlier
repairs.
5. Keep the house warm.
The temperature in your house should be at least 65 degrees. The
temperature inside the walls where the pipes are located is substantially
colder than the walls themselves. A temperature lower than 65 degrees
will not keep the pipes from freezing.
6. Check heating systems.
The proper use and maintenance of furnaces, fireplaces and wood-burning
stoves can prevent fire and smoke damage. Have furnaces, boilers
and chimneys serviced at least once a year. Make sure that smoke
and fire alarms are working properly and consider installing a carbon
dioxide detector.
7. Make sure steps and handrails are in good shape.
Broken stairs and banisters can become lethal when covered with
snow and ice. Make repairs now to prevent someone from falling and
seriously being injured.
8. Get to know your plumbing.
Learn how to shut the water off and know where your pipes are located.
If your pipes freeze, time is of the essence. The quicker you can
shut off the water or direct your plumber to the problem, the better
chance you have to prevent the pipes from bursting.
9. Hire a licensed contractor.
Have a professional survey your home for any structural damage.
If damage is discovered, have it repaired immediately so further
damage will not occur during the winter. Also, find out about ways
to prevent water damage due to snow-related flooding. Plastic coatings
for internal basement walls, sump-pumps and other methods can prevent
damage to your home and belongings.
10. Take special care if you plan to be away from home.
If you are not going to be in your home this winter for an extended
period of time, have the water system drained by a professional
to keep pipes from freezing or bursting. Also, hire someone to check
on your home on a regular basis. If there is a problem, it can be
fixed quickly - lessening any damage. Activity at your home will
also reduce the likelihood that it will be burglarized.
Standard homeowners policies cover winter-related disasters such
as burst pipes, ice dams, wind damage caused by weight of ice or
snow.
Damage to homes caused by flooding is usually excluded from most
standard homeowner policies. Flood insurance is available from the
National Flood Insurance Program ( http://www.fema.gov/nfip/a_facts.htm ) Ask your insurance professional about flood insurance, as well
as specific advice about winter-proofing your home.
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Frequently asked questions
Hopefully, reviewing the following information will provide you
with the answers you seek. If not, feel free to call us and ask
for specific answers to your questions.
• What type of insurance do I need for a co-op or condo?
• How much coverage do I need?
• What coverage do I need while remodeling my home?
• What type of disasters are covered?
• How do I file a homeowners claim?
• How is the settlement amount determined?
• What if I am having trouble settling the claim?
• How do I take a home inventory and why should I?
What type of insurance do I need for a co-op or condo?
If you have purchased a condo or co-op, the bank will require insurance
to protect its investment in your home. You may, however, need more
insurance to cover your personal items, liability or fees that may
be charged to you regarding shared areas of the building like the
lobby.
You will need two separate policies to protect your investment:
1. Your own insurance policy.
This provides coverage for your personal possessions, structural
improvements to your apartment and additional living expenses if
you are the victim of fire, theft or other disaster listed in your
policy. You also get liability protection.
2. A "master policy" provided by the condo/co-op board.
This covers the common areas you share with others in your building
like the roof, basement, elevator, boiler and walkways for both
liability and physical damage.
To adequately insure your apartment, it is important to know what
structural parts of your home are covered by the condo/co-op association
and what are not. You can do this by reading your association's
bylaws and/or proprietary lease. If you have questions, talk to
your condo association, insurance professional or family attorney.
Sometimes the association is responsible for insuring the individual
condo or co-op units, as they were originally built, including standard
fixtures. The individual owner, in this case, is only responsible
for alterations to the original structure of the apartment, like
remodeling the kitchen or bathtub. Sometimes this includes not only
improvements you make, but those made by previous owners.
In other situations, the condo/co-op association is responsible
only for insuring the bare walls, floor and ceiling. The owner must
insure kitchen cabinets, built-in appliances, plumbing, wiring,
bathroom fixtures etc.
Also, ask your insurance professional about the following additional
coverages:1. Unit assessment.
This reimburses you for your share of an assessment charged to all
unit owners as a result of a covered loss. For instance, if there
is a fire in the lobby, all the unit owners are charged the cost
of repairing the loss.
2. Water back-up.
This insures your property for damage by the back-up of sewers or
drains. Water back-up may not always be included in a policy. Check
to see that it is included.
3. Umbrella liability.
This is an inexpensive way to get more liability protection and
broader coverage than is included in a standard condo/co-op policy.
4. Flood or earthquake.
If you live in an area prone to these disasters, you will need to
purchase seperate flood and earthquake policies. Flood insurance
is available through FEMA's National Flood Insurance Program ( http://www.fema.gov/nfip/ ). Both flood and earthquake insurance can be purchased through
your insurance agent.
5. Floater or endorsement.
If you own expensive jewelry, furs or collectibles, you might consider
getting additional coverage since there is generally a $1,000 to
$2,000 limit for theft of jewelry on a standard policy.
When purchasing insurance, it is important to find an agent or company
that specializes in condominiums or co-ops. Also donít forget
to ask about all available discounts. You can reduce your rates
by raising your deductibles and by installing a smoke and fire alarm
system that rings at an outside service. If you insure your unit
with the same company that underwrites your buildingís insurance
policy, you might also get an additional reduction in premiums.
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How much homeowners insurance do I need?
You need enough insurance to cover the following:
1. The structure of your home.
2. Your personal possessions.
3. The cost of additional living expenses if your home is damaged
and you have to live elsewhere during repairs.
4. Your liability to others.
The structure
You need enough insurance to cover the cost of rebuilding your home
at current construction costs. Don't include the cost of the land.
And don't base your rebuilding costs on the price you paid for your
home. The cost of rebuilding could be more or less than the price
you paid or could sell it for today.
Some banks require you to buy homeowners insurance to cover the
amount of your mortgage. If the limit of your insurance policy is
based on your mortgage, make sure it's enough to cover the cost
of rebuilding. (If your mortgage is paid off, don't cancel your
homeowners policy. Homeowners insurance protects your investment
in your home.)
For a quick estimate of the amount of insurance you need, multiply
the total square footage of your home by local building costs per
square foot. To find out construction costs in your community, call
your local real estate agent, builders association or insurance
agent.
Factors that will determine the cost of rebuilding your home:
• Local construction costs
• The square footage of the structure
• The type of exterior wall construction -- frame, masonry
(brick or stone) or veneer
• The style of the house (ranch, colonial)
• The number of bathrooms and other rooms
• The type of roof and materials used
• Other structures on the premises such as garages, sheds
• Fireplaces, exterior trim and other special features like
arched windows
• Whether the house, or parts of it like the kitchen, were
custom built
• Improvement to your home - adding a second bathroom, enlarging
the kitchen or other additions that have added value to your home
Standard homeowners policies provide coverage for disasters such
as damage due to fire, lightning, hail, explosions and theft. They
do not cover floods, earthquakes or damage caused by lack of routine
maintenance.
Flood insurance is available from the Federal Insurance Administration
( http://www.fema.gov ) and earthquake coverage is available from private insurance companies
or, in California, also through the California Earthquake Authority
( http://www.earthquakeauthority.com )
Replacement cost policies
Most policies cover replacement cost for damage to the structure.
A replacement cost policy pays for the repair or replacement of
damaged property with materials of similar kind and quality. There
is no deduction for depreciation -- the decrease in value due to
age, wear and tear, and other factors.
If you purchase a flood insurance policy, coverage for the structure
is available on a replacement cost basis.
Guaranteed or extended replacement cost coverage
After a major hurricane or a tornado, building materials and construction
workers are often in great demand. This can push rebuilding costs
above homeowners policy limits, leaving you without enough money
to cover the bill. To protect against such a situation, you can
buy a policy that pays more than the policy limits.
An extended replacement cost policy will pay an extra 20 percent
or more above the limits, depending on the insurance company. A
guaranteed replacement cost policy will pay whatever it costs to
rebuild your home as it was before the fire or other disaster.
Building codes
Building codes are updated periodically and may have changed significantly
since your home was built. If your home is badly damaged, you may
be required to rebuild your home to meet new building codes. Generally,
homeowners insurance policies (even a guaranteed replacement cost
policy) won't pay for the extra expense of rebuilding to code. Many
insurance companies offer an Ordinance or Law endorsement that pays
a specified amount toward these costs. (An endorsement is a form
attached to an insurance policy that changes what the policy covers.)
Inflation guard
Consider adding an inflation guard clause to your policy. This automatically
adjusts the dwelling limit when you renew your policy to reflect
current construction costs in your area.
Older homes
If you own an older home, you may not be able to buy a replacement
cost policy. Instead, you may have to buy a modified replacement
cost policy. This means that instead of repairing or replacing features
typical of older homes, like plaster walls and wooden floors, with
similar materials, the policy will pay for repairs using the standard
building materials and construction techniques in use today.
Insurance companies differ greatly in how they insure older homes.
Some won't insure older homes for the replacement cost because of
the expense of re-creating special features like wall and ceiling
moldings and carvings. Other companies will insure older homes for
the replacement cost as long as the dwelling is in good condition.
If you can't insure your home for the replacement cost or choose
not to do so -- in some cases, the cost of replacing a large old
home is so high that you might not want to replace it with a house
of the same size -- make sure the limits of the policy are high
enough to provide you with a house of acceptable size and quality.
Your personal possessions
Most homeowners insurance policies provide coverage for your personal
possessions for approximately 50% to 70% of the amount of insurance
you have on the structure or ìdwellingî of your home.
The limits of the policy typically appear on the Declarations Page
under Section I, Coverages, A. Dwelling.
To determine if this is enough coverage, you need to conduct a home
inventory. This is a detailed list of everything you own and information
related to the cost to replace these items if they were stolen or
destroyed by a disaster such as a fire. If you think you need more
coverage, contact your agent or insurance company representative
and ask for higher limits for your personal possessions.
Replacement Cost or Actual Cash Value
You can insure your possessions in two ways. You can either insure
your belongings for their actual cash value or their replacement
cost.
A cash value policy pays the cost to replace your belongings minus
depreciation. A replacement cost policy, on the other hand, reimburses
you for the cost to replace the item.
Suppose, for example, a fire destroys a 10-year-old TV set in your
living room. If you have a replacement cost policy for the contents
of your home, the insurance company will pay to replace the TV set
with a new one. If you have an actual cash value policy, it will
pay only a percentage of the cost of a new TV set because the TV
has been used for 10 years and is worth a lot less than its original
cost. Some replacement cost policies also replace the item and deliver
it to you.
Generally, the price of replacement cost coverage is about 10% more
than actual cash value. If you need a flood insurance policy, you
can purchase flood insurance for your belongings. It is only available,
however, on an actual cash value basis.
Insuring expensive items with floaters/endorsements
There may be limits on how much coverage you get for expensive
items such as jewelry, silverware and furs. Generally, there is
a limit on jewelry for $1,000 to $2,000. You should ask your agent
or look it up in your policy. This information is in Section I,
Personal Property, Special Limits of Liability. Insurance companies
may also place a limit on what they'll pay for computers.
If the limits are too low, consider buying a special personal property
floater or an endorsement. These allow you to insure these items
individually or as a collection. With floaters and endorsements,
there is no deductible. You are charged a premium based on what
the item (or collection) is, where you live and its dollar value.
You can determine the value by providing your agent with a recent
receipt or getting the item or collection appraised.
Additional living expenses after a disaster
This is a very important feature of a standard homeowners insurance
policy. This pays the additional costs of temporarily living away
from your home if you can't live in it due to a fire, severe storm
or other insured disaster. It covers hotel bills, restaurant meals
and other living expenses incurred while your home is being rebuilt.
Coverage for additional living expenses differs from company to
company. Many policies provide coverage for about 20% of the insurance
on your house. Some companies will even sell you a policy that provides
you with an unlimited amount of loss of use coverage, for a limited
amount of time.
If you rent out part of your house, this coverage also reimburses
you for the rent that you would have collected from your tenant
if your home had not been destroyed.
You should talk to your agent or company to make sure you know exactly
how much coverage you have and how long the coverage will be in
effect. In most cases, you can increase this coverage for an additional
premium.
Liability to others
This part of your policy covers you against lawsuits for bodily
injury or property damage that you or family members cause to other
people. It also pays for damage caused by pets. It pays for both
the cost of defending you in court and for any damages a court rules
you must pay.
Generally, most homeowners insurance policies provide a minimum
of $100,000 worth of liability insurance, but higher amounts are
available. Increasingly, it is recommended that homeowners consider
purchasing at least $300,000 to $500,000 worth of coverage of liability
protection.
Umbrella or Excess Liability
You should buy enough liability insurance to protect your assets.
If you own property and or have investments and savings that are
worth more than the liability limits in your policy, you may consider
purchasing an excess liability or umbrella policy.
Umbrella or excess liability policies provide extra coverage. They
start to pay after you have used up the liability insurance in your
underlying home (or auto) policy. An umbrella policy is not part
of your homeowners policy. You have to purchase it separately. In
addition to providing a higher dollar amount, they offer broader
coverage. You are covered for libel, slander, and invasion of privacy.
These things are not covered under standard homeowners or auto policies.
The cost of an umbrella policy depends on how much underlying insurance
you have and the kind of risk you represent. The greater the underlying
liability coverage, the cheaper the policy. This is becaue you would
be the less likely to need the additional insurance. Most companies
will require a minimum of $300,000 on your home and your car, if
you own one.
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Remodeling your home
If you plan to remodel your home, make sure that your home, the
contractor and subcontractors have adequate insurance coverage.
Don't make the mistake of waiting until an addition or extra room
is completed to increase the insurance coverage on the structure
of your home. If the new addition is destroyed or damaged before
insurance coverage has been increased, you may be responsible for
the cost of repairing or rebuilding the addition.
Contact your insurance agent or representative before or shortly
after the construction begins to increase the insurance coverage
on your house to reflect the increase in the cost to rebuild the
structure.
When hiring a general contractor, find out if the contractor has
workers compensation and ask to see a copy of the policy. Workers
compensation pays for medical and rehabilitation expenses and covers
lost wages if the workers sustain injuries on the job. Injured workers
may sue you if the contractor does not have proper insurance.
In most home improvement projects, the contractor subcontracts the
builders, electricians and plumbers. The workers hired may not be
full-time employees of the contractor and therefore not covered
under the contractor's workers compensation policy. While some independent
builders, electricians and plumbers may carry their own workers
compensation coverage, others may not.
You should verify the insurance coverage of the contractor and the
subcontractors. If the coverage is insufficient, you may need to
fill in the gaps by extending the limits of the liability portion
of your homeowners policy.
If you purchase additional items, such as furniture, exercise equipment
or electronics, you may need to increase the amount of insurance
you have on your personal possessions. Keep receipts and add them
to your home inventory.
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What type of disasters are covered?
Most homeowners policies cover all disasters listed below. Some
policies provide coverage only for the first 10 listed. Check your
insurance policies for the "perils" covered.
|
Dwelling & personal property |
Dwelling
|
Personal
property
|
Dwelling & personal property
|
|
Perils
|
Basic HO-1*+
|
Broad HO-2*
|
Special HO-3*
|
Special HO-3
|
Renters HO-4
|
Condo/
Co-op HO-6
|
Modified Coverage HO-8
|
|
Fire or lightning |
x |
x |
x |
x |
x |
x |
x |
|
Windstorm or hail |
x |
x |
x |
x |
x |
x |
x |
|
Explosion |
x |
x |
x |
x |
x |
x |
x |
|
Riot or civil commotion |
x |
x |
x |
x |
x |
x |
x |
|
Damage caused by aircraft |
x |
x |
x |
x |
x |
x |
x |
|
Damage caused by vehicles |
x |
x |
x |
x |
x |
x |
x |
|
| Smoke |
x |
x |
x |
x |
x |
x |
x |
|
Vandalism or malicious mischief |
x |
x |
x |
x |
x |
x |
x |
|
Theft |
x |
x |
x |
x |
x |
x |
x |
|
Volcanic eruption |
x |
x |
x |
x |
x |
x |
x |
|
Falling object |
|
x |
x |
x |
x |
x |
|
|
Weight of ice, snow or sleet |
|
x |
x |
x |
x |
x |
|
|
Accidental discharge or overflow of water or steam from within
a plumbing, heating, air conditioning, or automatic fire-protective
sprinkler system, or from a household appliance. |
|
x |
x |
x |
x |
x |
|
|
Sudden and accidental tearing apart, cracking, burning, or
bulging of a steam or hot water heating system, an air conditioning
or automatic fire-protective system. |
|
x |
x |
x |
x |
x |
|
|
Freezing of a plumbing, heating, air conditioning or automatic, fire-protective
sprinkler system, or of a household appliance. |
|
x |
x |
x |
x |
x |
|
|
Sudden and accidental damage from artificially generated
electrical current (does not include loss to a tube,
transistor or similar electronic component) |
|
x |
x |
x |
x |
x |
|
|
All perils except flood, earthquake, war, nuclear accident,
landslide, mudslide, sinkhole and others specified in your
policy. Check your policy for a complete list of perils excluded. |
|
|
x |
|
|
|
|
|
* HO-1,
HO-2 and HO-3 refer to standard Homeowners Policies.
+HO-1
has been discontinued in most states. |
|
Disasters not covered
1. Floods.
You can purchase this coverage directly from your homeowners insurance
agent. However, the policy is provided by the Federal Flood Insurance
Program ( 800-427-4661, http://www.fema.gov/nfip ).
You can get replacement cost coverage for the structure of your
home, but only actual cash value coverage is available for your
possessions. There may also be limits on coverage for furniture
and other possessions stored in your basement.
Flood insurance is available for renters as well as homeowners.
You will need flood insurance if you live in a designated flood
zone. But also consider buying it if your house could be flooded
by melting snow, an overflowing creek or water running down a steep
hill. Donít wait until the evening news announces a flood
season warning to buy a policy. There is a 30-day waiting period
before coverage takes effect.
2. Earthquakes.
This coverage can be a separate policy or an endorsement to your
homeowners or renters policy. It available from most insurance companies.
In California, it is also available from the California Earthquake
Authority ( http://www.cea.gov ). In earthquake prone states like
California, the policy comes with a high deductible.
3. Maintenance damage.
It is your responsibility to take reasonable precautions to protect
your home from damage. Your insurance policy will not cover damage
due to lack of maintenance, mold, termite infestation and infestation
from other pests.
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How do I file a homeowners claim?
If someone has become injured on your property or if a violent
storm destroys your home, you will need to file a claim with your
insurance company. Remember, a homeowners policy is a contract between
you and your insurance company. And there are rules and procedures
that you and your insurer must follow. Read your insurance policy
to see what your responsibilities are.
1. Report any crime to the police.
If you are the victim of a theft or your home has been vandalized
or burglarized, report it to the police. Get a police report and
the names of all law enforcement officers that you speak with.
2. Phone your agent or company immediately.
Insurance policies place a time limit on filing claims. Find out
what the time limit is. Ask questions: Am I covered? Does my claim
exceed my deductible? (Your deductible is the amount of loss you
agree to pay yourself when you buy a policy.) How long will it take
to process my claim? Will I need to obtain estimates for repairs
to structural damage?
3. Make temporary repairs.
Take reasonable steps to protect your property from further damage.
Save receipts for what you spend and submit them to your insurance
company for reimbursement.
4. Prepare a list of lost or damaged articles.
You are going to need to substantiate your loss. Avoid throwing
out damaged items until the adjuster has visited your home. You
should also consider photographing or videotaping the damage. Prepare
a home inventory, make a copy for your adjuster and supply him or
her with copies of receipts from damaged items.
5. If you need to relocate, keep your receipts.
If your home is severely damaged and you need to find other accommodations
while repairs are being made, keep records of all additional expenses
incurred. Most homeowners insurance policies provide coverage for
the "loss of use" of your home.
6. Get claim forms.
Once your insurance company has been notified of your claim, the
company is required to send you the necessary claim forms to you
by the end of a specified time period. (The time period varies from
state to state.) Return the properly filled out forms as soon as
possible in order to avoid delays.
7. Have an adjuster inspect the damage to your home.
Your insurance company will probably arrange for the adjuster to
come and inspect your home.
Once you and your insurance company agree on the terms of your settlement,
state laws require that you be sent payment promptly. In most cases,
your claim will be processed quickly. If you have any questions
about the claim filing laws in your state, call your insurance agent
or your state department of insurance.
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How is the settlement amount determined?
The settlement amount depends on which type of policy you have.
Having inadequate insurance can affect the amount of compensation
you get.
1. Replacement Cost and Actual Cash Value
Replacement cost provides you with the dollar amount needed to replace
a damaged item with one of similar kind and quality without deducting
for depreciation - the decrease in value due to age, obsolescence,
wear and tear and other factors. An actual cash value policy pays
you the amount needed to replace the item minus depreciation.
Suppose, for example, a tree fell through the roof onto your eight-year-old
washing machine. If you had a replacement cost policy for the contents
of your home, the insurance company would pay to replace the old
machine with a new one. If you had an actual cash value policy,
the company would pay only a percentage of the cost of a new washing
machine because a machine that has been used for eight years would
be worth less than its original cost.
Suppose, also, that the tree damaged your 15-year-old roof so badly
that it had to be completely replaced. If you had a replacement
cost policy, the insurance company would pay the full cost of installing
a new roof. If you had an actual cash value policy, it would pay
a smaller percentage of the cost of replacing it.
2. Extended and Guaranteed Replacement Cost
If your home is damaged beyond repair, a typical homeowners policy
will pay to replace it up to the limits of the policy. When the
value of your insurance policy has kept up with increases in local
building costs, a similar dwelling can generally be rebuilt for
an amount that is within the policy limits.
Some insurance companies offer a replacement cost policy that will
pay a certain percentage over the limit to rebuild your home --
20% or more, depending on the insurer -- so that if building costs
go up unexpectedly, you will have extra funds to cover the bill.
These are called extended replacement cost policies. A few insurance
companies still offer a guaranteed replacement cost policy that
pays whatever it costs to rebuild your home as it was before the
disaster. But neither a guaranteed or extended replacement cost
policy will pay for a house that's better than the one that was
destroyed.
3. Mobile Home Policies
If you own a mobile home, you may have a policy based on replacement
cost, actual cash value or, in a few cases, a "stated amount."
With a stated amount policy, the maximum amount you receive if your
home is destroyed is the amount you agreed to when the policy was
issued. The depreciation in the value of your home is not considered
in the settlement. If you opt for the stated amount, update your
policy annually to make sure that the stated amount will cover the
realistic cost of replacing your mobile home. Check with local mobile
home dealers to find out what similar homes sell for now.
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What can I do if I am having trouble settling my claim?
If you are unsatisfied with how your insurance company is handling
your claim, you have several options:
1. Talk to the agent or company representative who sold you
the policy
Let the agent know that you are dissatisfied and explain the specifics
of your problem.
2. Contact the claims manager of the company
Provide a written explanation of your problem with copies of supporting
documentation. Remember to send only a copy and not any original
documentation. If you are insured with a smaller company, consider
writing directly to the president. Going to the top can sometimes
speed the process.
3. Contact your state insurance department
Insurance is a regulated industry and your state department of insurance
should be able to help you resolve your problem.
4. Call the National Insurance Consumer Help line
This toll-free telephone service (800-942-4242) can help you work
with your insurance company to solve the problem.
5. Consult an attorney
If you have tried all four of the above tips and still canít
resolve the claim, you may want to talk to an attorney. You may
have to pay a consultation fee for your initial visit, so make sure
you know how much this will cost. Meet with an attorney that has
solid references or get the name of someone from your local bar
association. Prepare for the visit by bringing a copy of your insurance
policy and other relevant documents. Get the fee structure in writing
before you decide to pursue the case.
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How do I take a home inventory and why?
Would you be able to remember all the possessions youíve
accumulated over the years if they were destroyed by a fire? Having
an up-to-date home inventory will help you get your insurance claim
settled faster, verify losses for your income tax return and help
you purchase the correct amount of insurance.
Start by making a list of your possessions, describing each item
and noting where you bought it and its make and model. Clip to your
list any sales receipts, purchase contracts, and appraisals you
have. For clothing, count the items you own by category -- pants,
coats, shoes, for example ñ- making notes about those that
are especially valuable. For major appliance and electronic equipment,
record their serial numbers usually found on the back or bottom.*
Don't be put off!
If you are just setting up a household, starting an inventory list
can be relatively simple. If youíve been living in the same
house for many years, however, the task of creating a list can be
daunting. Still, itís better to have an incomplete inventory
than nothing at all. Start with recent purchases and then try to
remember what you can about older possessions.
• Big ticket items
Valuable items like jewelry, art work and collectibles may have
increased in value since you received them. Check with your agent
to make sure that you have adequate insurance for these items. They
may need to be insured separately.
• Take a picture
Besides the list, you can take pictures of rooms and important individual
items. On the back of the photos, note what is shown and where you
bought it or the make. Donít forget things that are in closets
or drawers.
• Videotape it
Walk through your house or apartment videotaping and describing
the contents. Or do the same thing using a tape recorder.
• Use a personal computer
Use your PC to make your inventory list. Personal finance software
packages often include a homeowners room-by-room inventory program.
• Storing the list, photos and tapes
Regardless of how you do it (written list, floppy disk, photos,
videotape or audio tape), keep your inventory along with receipts
in your safe deposit box or at a friend's or relative's home. That
way youíll be sure to have something to give your insurance
representative if your home is damaged. When you make a significant
purchase, add the information to your inventory while the details
are fresh in your mind.
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