Homeowners Insurance - FAQs
Claims and Payments
Q. How quickly will my possessions be replaced if I file a claim?
A. Each insurance carrier has a different policy on filing claims but the nature of the claim has the greatest effect on how quickly it is processed. Also, the specific article that was lost and your insurance carrier’s policy affect the turn around rate. We only represent strong, reputable insurance carriers that have a high rating from AM Best (an independent rater of insurance carriers).
Q. Do I have to pay my premium in one lump sum or can I spread it over a period of time?
A. Depending on the insurance carrier, the payments can be paid in full or spread out over the life of the policy.
Q. Are you covered for direct losses due to fire, lightning, tornadoes, wind storms, hail, explosions, smoke, vandalism and theft?
A. Yes. The HO-3 provides broad coverage for a large number of perils, including all those listed. There are some limits, however, on the amount of insurance you have.
Check the dollar limits of insurance in your policy. Make sure you are comfortable with the amount of insurance you have for specific items. For example, the standard policy provides only $1,000 for theft of jewelry. If your jewelry is worth a lot more, you should purchase higher limits. You may wish to add a floater to your policy to cover specific possessions, such as expensive paintings or silverware. The floater will provide both higher limits and protect you from additional risks not covered in your normal policy.
Also, if you live on the Atlantic or Gulf coasts there may be some restrictions on your coverage for wind damage. Check this out with your agent.Q. Your house is totally destroyed in a fire. You have bought $150,000 worth of insurance to cover the structure of your house. Will this be enough to rebuild your home?
A. If the cost of rebuilding your home is equal to or less than $150,000 you would have enough coverage. The HO-3 policy pays for structural damage on a replacement cost basis. If the cost of replacing your home is, say, $120,000, then that is all the insurance you need. On the other hand if the cost of rebuilding your home is $180,000, then you will be short $30,000. If you choose not to replace your home, you will receive the replacement cost of your home, less depreciation. This is called actual cash value.
Make sure that the amount of insurance you have will cover the cost of rebuilding your house. You can find out what this cost is by talking to your insurance representative or builders in your area.
Do not use the price of your house as the basis for the amount of insurance you purchase. The market price of your house includes the value of the land on which the house is situated. In almost all cases, the land will still be there after a disaster, so you do not need to insure it. You only need to insure the structure.
Q. Are you covered for earthquake damage?
A. No. Earthquake coverage is sold as additional coverage to the homeowners policy. To determine whether you should purchase this insurance, talk to your agent or company representative. In earthquake-prone areas, the price of this insurance is relatively high. In other areas, it is relatively cheap.
Q. A neighbor slips on your sidewalk and threatens to take you to court for damages. Does your policy protect you?
A. Yes. The policy will pay for damages, if the accident is the result of your negligence. It will also pay for the legal costs of defending you against a claim. Also, the medical payments part of your homeowners policy will cover medical expenses arising from an injury to a neighbor or guest. Check to see how much liability protection you have. The standard amount is $100,000. If you feel you need more, consider purchasing higher limits.
Check to see how much liability protection you have. The standard amount is $100,000. If you feel you need more, consider purchasing higher limits.
Q. Am I covered for an "Act of God"?
A. Yes. Normally, you are covered for "Acts of God." The term "Act of God" usually refers to natural disasters like hurricanes and tornadoes, as opposed to man-made acts, like thefts or auto accidents. Most natural disasters, with the notable exceptions of floods and earthquakes, are covered under normal insurance.
Q. Does your policy provide less coverage than the HO-3?
A. If the answer is yes, review your coverage with your agent. Some older policies provide less coverage than the HO-3. They may not provide coverage for water damage, theft, or liability. They may also provide coverage for the house on an actual cash value basis, rather than a replacement cost basis. Actual cash value means replacement cost less depreciation. For example, if your roof is destroyed in a storm, the insurance will only pay the cost of a new roof less the amount of depreciation of the old roof. If your roof was in great shape, this deduction will not be large. However, if the roof was old and worn out, the deduction for depreciation may be considerable.
Try to get an HO-3. Community-based groups, like neighborhood housing services, can help you get such insurance.
Q. Your house is close to the ocean. You have heard that if your house is destroyed by the wind, the town`s new building code requires that you rebuild the house on stilts. This will cost $30,000, in addition to the cost of rebuilding your house. Are you covered for this extra cost?
A. No. The HO-3 excludes costs caused by ordinance or laws regulating the construction of buildings. Purchase a law and ordinance policy. This will cover the extra costs involved in meeting new building codes.
Q. Why do I need an umbrella insurance policy?
A. To protect your assets. Your home, savings, family heirlooms, trust funds, or future inheritance could all be lost if you are sued for more than your current auto or homeowners liability limits.
Q. How do I know how much coverage to purchase?
A. The amount of coverage is dependant on each individual need and risk analysis. It is usually safe to insure your house at 100% of replacement cost, thus eliminating the potential risk in underinsuring your investment.
Q. What are the limits of my coverage?
A. The limits of coverage can be tailored to fit your individual insurance needs. There are minimum and maximum limits that differ depending upon the state you live in.
Q. What determines my coverage limits?
A. Each insurance carrier has different minimum and maximum limits of coverage. With an agent’s assistance you can determine your personal insurance needs within the insurance carrier's limits. The limits are determined by your liability exposure and amount of personal property.
Q. During a storm, a tree falls and damages your roof. Are you covered?
A. Yes. You are covered for the damage to your roof. You are also covered for the removal of the tree, up to a $500 limit.
Cut down dead or dying trees close to your house. Prune branches that are near your house. It's true that your insurance covers damage, but falling trees and branches can also injure your family.
Q. During a storm, a tree falls and does no damage to your property. Are you covered for the cost of removing the tree?
A. No. Your trees and shrubs are covered for losses due to risks like vandalism, theft and fire, but not wind damage.
Decide if you need extra insurance for the trees, plants and shrubs on your property. You may be able to purchase extra insurance which will cover the cost of removing and replacing fallen trees and other plants. Talk to your insurance representative about the availability and cost of this extra insurance.
Q. During a storm, the power from the electric utility is lost. All the food in your refrigerator is spoiled and must be thrown out. Can you make a claim
A. The general answer is no. However, there are a number of exceptions. In some states, food spoilage is covered under the homeowners policy. In addition, if the power loss is due to a break in a power line on or close to your property, you may be covered.
Check with your agent to determine whether you are covered for food spoilage in your state. If not, you can add food spoilage coverage to your policy for an additional premium.
Q. Your golf clubs are stolen from the trunk of your car. Can you recover?
A. Yes. The HO-3 covers your personal property while it is anywhere in the world. However, if your golf clubs are old, you will only get their current value. This normally will not be enough to purchase a new set.
Consider purchasing a replacement cost endorsement for your personal property. This way you will get the full cost of replacing the golf clubs, less the applicable deductible.
Q. You have a boat with a 50 hp engine. If it is stolen, are you covered? What if there is a boating accident and you get sued? Are you covered?
A. If the boat is stolen from your residence, in most cases you can recover only $1,000. If the boat is stolen elsewhere you are not covered.
You are also not covered for liability arising from an accident with the boat. The homeowners policy provides liability coverage for boats with engines less than 25 hp.
See your insurance representative about getting extra coverage for your boat, including theft and liability. Ask about the boat owners policy.
Q. Are you covered for flood?
A. No. Flood insurance is provided by the federal government under a program run by the Federal Insurance Administration. If you are in a flood-prone area it may be wise to purchase flood insurance. In some parts of the country, homes can be damaged or destroyed by mudslides. This risk is also covered under flood policies. Contact your agent or company representative to get this insurance.
Q. A pipe bursts and water flows all over your floors. Are you covered?
A. Yes. The HO-3 covers you for accidental discharge of water from a plumbing system.
Check your plumbing and heating systems once a year. While you are covered for damage, who needs the mess and hassle?
Q. Water seeps into your basement from the ground. Are you covered?
No. Water seepage is excluded under the HO-3. And if the water seepage is not due to a flood you will not be covered under a flood policy. Problems like seepage are viewed as maintenance issues and are not covered by insurance. You should see a contractor about waterproofing your basement.
You should see a contractor about waterproofing your basement.Q. What are the different flood zones and what do they represent?
A = Areas of high risk where the Base Flood Elevations (BFEs) are not provided.
A1-A30= Areas of high risk where the BFEs are provided.
AE = The new designation for A1-A30 zones.
AH = Shallow water depths and/or unpredictable flow paths between one and three feet occur. BFEs are provided.
AO = Shallow water paths and/or unpredictable flow paths between one and three feet occur. BFEs are not provided. Base Flood depths may be provided.
A99 = Where enough progress has been made on a protective system such as dikes, dams and levees, to consider it complete for insurance rating purposes. No BFEs are provided.
AR = High risk areas that results from the decertification of a previous accredited flood protection system that is determined to be in the process of being restored to provide base flood protection.
V = An area which is inundated by tidal floods with velocity. No BFEs are provided.
V1-V30 = Identical to V zone, but BFEs are provided.
VE = The new designation for V1-V30 zones.
VO = An area having shallow water depths and/or unpredictable flow paths between 1 and 3 feet with velocity.
B, C, X = Areas of moderate or minimal hazard subject to flooding from severe storm activity or local drainage problems. These zones may be lightly shaded or not shaded on the FIRM. Historically, almost 33% of all claims paid have been in these zones.
D = An area where the flood hazard is undetermined and is usually very sparsely populated.
Q. What can you do to reduce your risk from flood damage?
A. There are many ways to reduce your risk, including the following:
- Keep valuables out of the basement and lower levels
- Elevate the fuse box or main breaker and the utility meter
- Purchase flood insurance
Q. Can I purchase flood insurance if I don't live in a flood zone?
A. You can purchase flood insurance if you do not live in a flood zone, but you are required to have flood insurance if you do live in a flood zone.
Q. Does flood insurance cover injury caused by a flood?
A. Flood insurance is a property-only coverage. Therefore, no medical payment coverage is available through flood insurance.
Q. Does flood insurance cover structural damage as well as personal property damage?
A. Most flood insurance policies cover the dwelling if it's above ground, but personal property may have to be purchased on a separate policy.
Q. Would flood insurance cover someone else’s property that was at my home and was damaged?
A. Yes. The property located on your premises and in your control is covered under the flood insurance program.
Q. How much are umbrella policy premiums?
This depends on the amount of insureds, number of vehicles, and potential risk factors. However, when compared to typical insurance policies, dollar for dollar, umbrella policies provide more coverage. Premiums can be as low as $100 for $1 million coverage.
Q. What does an umbrella policy cover?
A. Umbrella policies cover liability claims brought against you or a named insured. Umbrella policies are designed to a set amount, over and above what your current policies cover. For example, your auto insurance has limits up to $300,000 and you have a $1 million umbrella. The umbrella policy would pay for losses in excess, up to your limit of $1 million. This means the losses could total $1.3 million, all of which would be covered by your auto and umbrella policies ($300,000 by your auto and $1 million by your umbrella).
Q. What is the major difference between a condominium insurance policy and a homeowners policy?
A. A homeowners policy covers liability, medical payments and loss of use as well as the dwelling amount. In a condominium policy, loss of use, medical payments, and liability are still covered, but the cost of the dwelling is not included. Condominium owners are only responsible for the internal drywall while the condominium owners association is responsible for the dwelling itself.
Q. Does the cost of my condominium or the cost of my belongings affect the cost of my premium?
A. The cost of the dwelling does not affect the premium; however, personal property, limits of liability, medical payments, year constructed, and number of units between firewalls do affect the premium.
Q. If I rent rather than own the condominium can I still get condominium insurance?
A. If you do not own the condominium, you would purchase renters insurance rather than condominium insurance to protect your personal property.
Q. Do I have to rent an apartment to be eligible or can I rent a condominium or mobile home? Renters policies provide coverage for individuals that rent an apartment, condominium, or mobile home.
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