Frequently Asked Questions

Homeowners Insurance

What is Homeowners insurance?

Homeowners insurance is an insurance policy that protects you financially in the event that your home and property is damaged in a covered peril, or in the event of a covered lawsuit.

Perils that are typically covered by a standard home insurance policy include fire, wind, lightning, hail and theft. While no one plans on losing their home or possessions to any of these perils, it unfortunately happens every day. Ask yourself this: If your home was ever destroyed in a fire, for example, how would you pay to rebuild your home? That’s where your homeowners insurance comes in.

Homeowners insurance protects the investment you have made in your home by providing you with coverage for specific hazards.

But your home insurance doesn’t stop there. In the event that someone was filing a lawsuit against you for accidental damage you caused to their property, how would you pay for the costly legal fees? Standard homeowners insurance also contains liability coverage that protects you and your family against lawsuits where another party finds you liable for damage to their property or person.

Can I own a home without homeowners insurance?

Home insurance is never required by law, however, the financial institution that holds your mortgage will most likely require your home to be insured for at least the amount of your loan. Lenders require home insurance to protect their investment in case of a disaster that destroys or damages your home. While home insurance may not be required by a lender, it is recommended that every home owner insure their home and belongings to protect against a loss.

Besides what is required, it is always a good idea to maintain adequate home insurance coverage in order to protect your own investment in your home. Even if you own your home and do not have a mortgage, your home is still susceptible to common perils. Having comprehensive home insurance coverage ensures that you will never have to worry about losing your investment if a covered disaster were to strike in your area.

How much does home insurance cost?

There are a great deal of factors that determine how much you will pay for homeowners insurance. Some of the factors you may have control over, others- you may not. However, it is always a good idea to be aware of what affects your rate and how you may be able to improve it.

Your Dwelling Coverage: Dwelling coverage is the amount of coverage you have to replace the structure of your home in the event of a loss. Your dwelling coverage is calculated by multiplying your home’s square footage by your local building costs. Local building costs vary from region to region.

Other Coverages: Aside from your dwelling coverage, there are other coverages included in your homeowners policy that may affect how much you pay. Contents coverage, other structures coverage and loss of use coverage are all typically set as a standard percentage of your dwelling coverage and can not be altered. However, Your Personal Liability and MedPay coverage offers some options for you as a homeowner. Personal liability limits, for example, can be increased to suit your needs. A standard homeowners policy would include a $100,000 personal liability limit. If you increased this limit to $500,000 or $1 million, you may see your rate increase. Some homeowners add endorsements to their policy to increase coverage for a specific item in their home such as fine jewelry, collectibles, etc. These endorsements may increase your monthly premium as well.

Deductibles: Typically, the higher you set your deductibles the lower your premium. However, never set your deductibles too high as this could put you at risk for financial loss in the event of a claim.

Home Construction: Some types of homes have been proven to better withstand wind, hail and other perils making them less expensive to insure than others. For example, owners of brick homes will typically see a slightly lower homeowners insurance rate than a wood-home owner with a comparable policy. Also, the age of your home will affect your rate. Older homes (especially those with original electrical, plumbing and heating systems) are at more of a risk for loss. For this reason, homeowners with older homes might see a slightly higher rate than others.

Home Safety Features: Home insurance companies reward homeowners who have safe homes. Discounts are available for homes that:
*Have burglar alarms
*Have fire alarms
*Are within a specific distance from a fire hydrant
*Have deadbolt locks
*Are within a specific distance from a fire department

Your Insurance Score: Another factor affecting your home insurance rate is your personal insurance score. Your personal insurance score is a number assigned to you by your insurance company that ranks your credit and insurance claims history. Typically, the better your insurance score, the better rates you will be offered by home insurance companies. Maintaining good credit is one good way to keep and secure lower rates.

The Area Where You Live: Lastly, part of what affects your home insurance rate is the geographical region of the U.S. that you live in. For example, if you live in coastal Florida, which is more prone to major hurricanes, you will see higher rates in that area as opposed to other parts of the country that are at less risk for natural disasters. The same goes for homeowners who live in areas prone to tornadoes, earthquakes and floods.

What information do I need to provide to my insurance agent?

When asking for a home insurance quote, be prepared to answer some questions about your home and claims history. Having all of this information available beforehand can help you get a quote faster.

Here is some of the information you may need to get a home insurance quote:
*Home Details such as square footage, construction type, roof age, etc.
*The amount of liability coverage you need
*If your home is your primary or secondary residence
*What type of pets you own (if any)
*Details about any home insurance claims you have filed in the past 5 years
*The age of your home and when your electrical, plumbing and heating were last updated

Having this information handy can help speed along the quote process. Plus, the more accurate the information you provide, the more accurate your quote.

What is an umbrella liability policy?

An umbrella liability policy serves as an extension of the liability coverage already included in your standard home insurance policy. As the name suggests, an umbrella liability policy is there to protect you in stormy financial weather- in the case of a lawsuit against you or a family member. It typically provides protection up to the limits specified in the policy for the following:

*Claims of bodily injury or property damage that are caused by either you or a member of your household *Claims of bodily injury that occur on your property or due to hazards on your property *Additional coverage above your auto policy for auto related liabilities *Protection against personal injury claims such as libel, slander, wrongful eviction and false arrest. *Costs for legal defense for a covered loss, including attorneys’ fees and court costs

Does my homeowners insurance cover flooding?

Flood damage to your home and personal property is NOT covered by standard homeowners’ insurance policies.

However, most insurance companies can offer you a separate flood insurance policy which is underwritten by the National Flood Insurance Program.

Homeowners located within a standard Flood Zone are typically required by their lenders to obtain flood insurance. What many homeowners outside of a standard Flood Zone may not realize, is that while a lender may not require flood insurance, it is always a smart investment to protect your home against flood damage. According to the Federal Emergency Management Agency (FEMA), 25-30 percent of all losses occur in low to moderate risk zones. Most homeowners who purchase flood insurance in the low to moderate risk zones are eligible for lower rates.

Flood Insurance typically covers the cost to replace your home, however it only covers the actual cash value for coverage of your possessions. Actual cash value refers to the value of the possessions to replace them minus the depreciation value.

Even if not required by your lender, we recommend obtaining flood insurance especially if your home has the potential to be flooded by a nearby river, lake, or melting snow.

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