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Homeowners and Renters Insurance

A Homeowners insurance policy is a combination of property and liability coverages which protect your home, personal belongings, and personal liability exposures. Renter policies, or tenant homeowners policies, can afford you many of the same coverages as a homeowner policy without providing you protection for the structure you occupy, since in a rental scenario you do not own the home.

A homeowner’s policy is one of the best and most comprehensive ways for most people to adequately insure the risk exposures present for the average policyholder.  Because of the homogenous nature of personal risks, rating a homeowner or renter policy can be incredibly quick and efficient.

If you have a policy already in place, having a copy of your declarations will provide your agent with most of the information to obtain a new quote.  The basic information your agent will need from you may include:

  1. Your address and phone number
  2. The square footage of your home
  3. Year of construction of your home and year of updates (wiring, heating, plumbing, roof, etc.)
  4. The limit of insurance your home is currently insured for
  5. A declaration of specifically scheduled personal property items (jewelry, firearms, silver, etc.). Higher value items may require a copy of the appraisal.

Some insurance companies may require your agent to obtain your social security number.  This is often used to assess your insurance score which may be based on prior claims history displayed on a CLUE report.  The insurance company may also consider other predictive factors when determining the favorability of your risk.  Some companies will reward clientele who possess a good credit and insurance score with more favorable rating since their statistics and analysis may show that insureds who maintain a favorable credit rating are typically less likely to experience losses.

The property portion of a homeowner policy can be broken down into 4 coverage lines: Coverage A, B, C, and D.

Coverage A is the limit found on your policy declarations that indicates the amount of insurance which is carried on your dwelling structure.  The insurance company will likely want this limit to be insured to 100% of the cost to replace the structure with like kind and quality.  Keep in mind, replacement cost is different than market value!

Coverage B is typically included in the policy at 10% of the coverage A limit and is applied to Related Private Structures or “Appurtenant Structures”.  These structures include things like detached garages, garden sheds, and sometimes privacy fences.  If you have higher value Related Private Structures, many companies will allow you to purchase higher limits for Coverage B than the standard 10%.

Coverage C is a line for Personal Property items and is usually calculated at 70% of the Coverage A limit.  It is advisable to purchase a replacement cost endorsement on your contents so that, in the event of a loss, the insurance company isn’t figuring the depreciated value for the items lost, such as your kitchen table, TV, sofas, furniture, and even your clothing.  Payment amounts for certain categories of personal property items may be restricted to a sublimit stated on the policy for certain causes of loss.  To receive a higher loss settlement for some items in the event of theft or “mysterious disappearance”, the insurance company may require you to specifically schedule these items and pay a premium based on the limit you have them insured for.  The rate may vary based on what kind of item you are electing to insure.

Coverage D provides you protection for the additional costs of living after a loss occurs.  If you need to rent a house while yours is being rebuilt, your homeowner’s insurance policy will cover the expenses associated with this up to the limit on the policy.  The limit may vary from company to company, but typically is written between 10-20% of the Coverage A amount of insurance.

In addition to property coverage, a homeowners policy provides liability protection for claims of negligence arising out of your personal activities.  This may include protection from lawsuits arising out of injuries to people while they are on your property, even if they are not expressly granted permission (by you) to be there.  A homeowners policy will also provide protection if someone is bitten by your dog or if someone simply slips and falls on your home’s walkway due to their own carelessness.  It is important to select a liability limit which is sufficient to protect the assets which you own.  Many homeowners policies may only offer up to $500,000 of liability protection.

If, in your discussions with an insurance professional, you discover that this is not sufficient, a Personal Umbrella Liability policy can be purchased to provide higher limits of liability insurance above and beyond your underlying homeowners and personal auto policy limits.  This may be an especially important conversation if your homeowner’s policy includes coverage for incidental home-based business pursuits, or other scenarios which add exposures and additional risks.

Frequently Asked Questions

  • I have several high value jewelry items, are they insured on my homeowners policy?

    You may receive a claim settlement for jewelry items lost in a fire, windstorm, collapse of building, lightning claim (among others), but you may not be able to receive the full value of an item in the event of a theft or mysterious disappearance unless you schedule the property on a Personal Property Floater. A company may require you to substantiate the insured limit of the item via an appraisal document. This can also provide you with coverage in the event a diamond falls out of a ring setting or a high-value piece of jewelry comes up missing without indication a theft has occurred.

    Since theft and mysterious disappearance are perhaps a few of the most common causes of loss for certain kinds of items, it might be a good idea to insure them on a floater to get an adequate amount of insurance coverage in the event a loss caused by one of these perils, occurs. If you do not schedule your items, your homeowner's policy may still provide you with coverage, but the amount of coverage may be constrained to a declared sub-limit of insurance. Commonly, these sub-limits are restricted to just $1,500 -$2,500 of coverage for items like jewelry, firearms, furs, gold or silver, coins, and other personal property items which may not be enough coverage depending on the value of your property.

  • If someone is soliciting business and slips on my walk and is injured, am I liable?

    You have a lower burden of responsibility to people who are on your property without your consent. However, you still may be held responsible for injuries they sustain while on your premises. It may be harder for someone who has not been invited onto your property to claim that you acted in a negligent way which resulted in their bodily injury or property damage; however, the medical payments portion of your homeowner's insurance is not paid out to a claimant based on fault. These payments are a good faith payment that is made regardless of negligence. These payments can go toward doctor bills or emergency room visits and are often the reason lawsuits are avoided after an injury occurs.

  • If someone is trespassing on my property and gets injured, I definitely don’t have to pay for their injuries, RIGHT?

    You have the most liability to your invited guests; however, you may still find situations where someone trespassing may be able to sue you and claim that your actions caused their bodily injury or property damage. For example, pretend people use the back of your property as a cut through to get to the next property. In this scenario, you have become annoyed and decide to dig a hole and cover it with leaves so that the trespassers unknowingly fall into the hole. One of the trespassers breaks an ankle and sues you. It is likely that, even though you dug the hole on your property, you knew that people regularly used this area as a cut through. Since you did nothing to stop anyone from falling into the hazard (fence, signs, etc.) and even disguised it with leaves, it is probable that a court could find you to be responsible for paying the damages incurred by the trespassing party.

  • I have a diving board on my pool, is that a bad thing?

    You may have a little more difficulty finding a homeowners carrier to write you an insurance policy, but there are plenty of companies who are OK with swimming pools with diving boards. They may ask questions about the depth of the pool, and most companies will want the pool to be fenced with a locked gate (standard building code in most jurisdictions anyhow).

  • I have a trampoline in my back yard, what if the neighbor kids come over and jump on it?

    If your children have friends over, it is probable that they will be horsing around on the trampoline. For this reason, insurance companies don’t really like the risk exposure that trampolines create. Some companies will not write a policy for you if you have a trampoline present while others may require that it has correctly installed netting, spring covers, and is tethered to the ground.

    If a neighbor is injured while playing on the trampoline, your policy may first respond by offering compensation from the medical payments section. If the loss is more severe, the neighbors will have to prove your negligence was responsible for the loss that occurred. In the case that they are able to provide evidence their loss was a result of your negligence, these payments would come out of the premises liability portion of your homeowner's policy.

  • What happens if my dog bites someone?

    Your personal liability, which you receive from a homeowners or renters policy, can provide you with coverage in the event your dog bites someone or someone else’s dog. Some companies will ask you if your dog has ever bitten anyone before writing your homeowner’s insurance. In other cases, the insurance company may require you to get rid of the dog after it bites someone, or certain municipalities may have laws or ordinances that stipulate dogs with a history of aggression must be euthanized. What happens after the event varies greatly, but your insurance policy can both provide you with liability insurance and also pay to defend you in court should the situation warrant it.

  • Does my homeowners policy give me personal liability coverage when I am hunting?

    It can. Whether you are hunting on private property or public game lands, if you caused someone injury, you may be able to receive some protection from the personal liability portion of your homeowner's policy. A situation such as an accidental shooting can often leave someone with expensive hospital bills or worse.

    For this reason you should carefully consider whether or not your homeowners policy alone is providing you with enough liability protection. A personal umbrella liability policy is one option to provide an increased limit of insurance. Another option is to look into an inexpensive outdoorsman liability policy. These policies are tailored to folks who have an active lifestyle in the shooting sports.

    You may also need to consult your agent if you are hunting on a property you have leased by contract. Some homeowners policies may exclude liability coverage when a contract is in place. This is something for your agent to help you decipher and advise you in.

  • How can I save money on my homeowners insurance?

    Listen to our podcast episode about 5 money-saving tips.