Personal Home Insurance 101
So, you’re looking for Homeowner’s Insurance?
So, you’re a bright eyed newcomer who just bought your first home…or maybe your kids moved out and you sold your home and bought a condo…or possibly you decided, screw this ownership thing, I want to rent, and you found an apartment perfect for you.
Whether it’s your first residence, or your fifth, everyone needs some form of home insurance. If you own a place, it’s generally your single most valuable piece of property. I mean, who wouldn’t want to protect that!
Even if you are just renting a place, you still have couches, tv’s, and a closet full of clothes! What would you do if everything went up in flames, and you lost everything? Look around your home, I’m sure you will see it all adds up.
Aside from protecting all that STUFF that we own…What about when someone trips and falls over that awesome throw rug in the doorway? Or when Fido decides to bite the mailman that carried bacon in his pocket?
With all these crazy insurance terms, where do I start?
Why does my policy look like a laundry list of coverages?
Do I have enough coverage? Too much?
Will I really be protected if something happens?
Before we begin, are you already an expert on the basics?
We are excited to shower you with all the best tips and advice, but first, you need to have a basic understanding of insurance and coverages. If you believe you are already a home insurance wiz, feel free to pass our coverage breakdown below and skip ahead to the good stuff…
Such as how to keep those sacred dollars in your pocket without leaving yourself unprotected! Face off against Izzy, testing your knowledge while allowing him to fetch your personalized breakdown of auto insurance tips & tricks. Izzy’s obsession with insurance allows him to measure your risk and help show you all the ways you can save money without sacrificing coverage.
Just answer a few questions to face off against Izzy, he loves insurance and can’t wait to fetch you some useful knowledge he buried. Woof!
Home Insurance Coverage
So, about these Home Insurance coverages…
Home Insurance coverage doesn’t have to be complicated, but it can seem overwhelming looking at a policy or quote for the first time. You’ll notice some coverages possibly coded to letters, while others are spelled out. Some will have a cost attached, others built in. What does it all mean?
A disclaimer about the below list…
As you have gathered, there are a LOT of different coverages offered for homeowners. In an effort to not completely overwhelm you and allow your eyes to glaze over, we kept this list to the absolute basics. Crawl before you walk…you get it.
Knowledge is Power
If you understand the coverages you will know if you are getting scammed into expensive extra add-ons or cutting coverage you truly need, just to save a couple bucks. Not only that, but you will understand enough to ask better questions to your agent, enhancing the service they can provide you on home insurance.
Have Izzy fetch you more information!
If you want to learn more details, use Izzy. Since there are so many different types of situations, Izzy will crack down and fetch you what is most relevant to you. Simple! Win – Win! Click the button by the picture of Izzy above or below.
Homeowner’s Insurance
Homeowner’s Insurance covers your single most valuable piece of property, your home. It will protect your main structure as well as the things you keep in it. Typically these are package policies, which will cover both damage to your property and your legal responsibility for any injuries or property damage you or members of your family cause other people.
Condo or Co-Op Insurance
Condominium and Co-Op Insurance will include many of the same coverages as a Homeowner’s policy. It will also cover additions and alterations, fixtures and installations within the perimeter walls, floor and ceiling of the unit. The main difference is that the condo owner is not responsible for the building, since the condo association will be responsible for that coverage. Specific responsibilities vary, so be sure to check your building’s by-laws.
Tenant’s or Renter’s Insurance
Tenant or Renter’s Insurance is designed for those who rent an apartment, condo or home. It will include many of the same coverages as a homeowner’s policy; the main difference is that a person who rents does not need to protect the building, since the landlord is responsible for that coverage. You will see protection for your personal property as well as liability coverage.
Rental or Landlord’s Insurance
Rental or Landlord’s Insurance is designed for those who own a home, condo or co-op, but rent the location out to a tenant. It will include many of the same coverages as a homeowner’s policy; the main difference is that a landlord only has limited personal property at that location and is not responsible for insuring their tenant’s personal property. A landlord will typically require a tenant to have their own tenant’s policy which will ensure that there is liability coverage for everyone, just in case of a lawsuit.
Core Coverages
A coverage specifically for those that own their home or condo, it covers you for the actual building or structure. It provides protection to your home or condo/co-op if damaged by fire, wind, hail, falling objects or other hazards.
The amount of coverage will vary according to policy levels and forms. Some policies are on a ‘named perils’ basis, which means they are limited to coverage only for the hazards which are specifically listed.
A policy that includes ‘Special’ or ‘Comprehensive’ will broaden your dwelling coverage, which allows for more flexible limits and greater protection. Generally this coverage will include items built into the home.
For Homeowners, this will protect other structures on your property which are not attached to your home, such as garages, sheds, inground pools or fences.
Finally, a coverage everyone needs! Whether you own or rent, this is also known as contents coverage and provides you with coverage for your personal possessions such as clothing and furniture. Pretty much, if you were to take off the roof and turn your home upside down. Whatever falls out would generally be covered by personal property.
Be aware of limitations and exclusions, some policies may offer broader coverage for your personal property or exclude certain items. Be sure to ask your agent about creating a schedule of your higher valued personal property.
For example: Jewelry that is not scheduled will be limited to a specific amount of coverage. That $10,000 ring that was lost, you may only receive $2,500 if it is not scheduled to the appraisal value. You should also remember to get an updated appraisal every few years to make sure you have the right amount of insurance.
This coverage will provide protection if you cannot live in your home due to damages from a claim. It will compensate you for the extra costs of having to rent an apartment or stay at a hotel. If you are an owner and rent the location to a tenant, should there be a claim that prevents your tenants from living in the space, this coverage will reimburse you for lost rental income while the location is repaired.
This coverage provides protection for accidental bodily injury or property damage to others for which you are legally liable. Examples include: dog bites, a child breaking a neighbor’s window or even a guest slipping and falling on your property. If you are sued, this will also provide the cost of your legal defense.
This covers medical expenses incurred by others who are injured while on your property or through your personal activities. Generally, this is used to prevent a lawsuit, which would cause a much higher claim.
A Sampling of Specialty Coverage
This will protect valuables such as jewelry, antiques, works of art, coin or stamp collection, fine glass and porcelain collectibles with potential for breakage, musical instruments, and cameras.
Anything that has a high value you should be getting appraised and adding to your schedule. Even if your item or collectible doesn’t fit within those categories, ask you agent to make sure you are covered properly. Schedules generally will also include coverage even if the item is lost.
This is an extra coverage that will extend to your vehicle or to your person for theft away from your home residence. If you do a lot of traveling or carry a lot of expensive items around for business, you might find this coverage is something you need.
On the other hand, some find it is unnecessary and will exclude the coverage to allow for a decent savings.
Some Examples: If Christmas gifts are stolen out of your vehicle, this covers those gifts. If you go away on vacation and your luggage is stolen, this would cover items in your luggage. If you are on the train and your laptop and other electronics are stolen from a bag, this would cover your belongings.
This is something that everyone should make sure is on their policy for the building and your personal property. Without replacement cost, your damaged possessions will be subject to depreciation. With replacement cost, the company will replace your damaged possessions at today’s prices for similar kind and quality.
This will cover you for any of your dogs that may bite others. Be careful as some companies exclude this coverage unless you specifically add it on. Be sure to notify your agent you have a dog and their breed, so they can advise you on the best coverage for your needs.
This is an additional coverage to cover for damage to your belongings due to a backup of water or materials through a sewer or drain.
Aside from any damages to your property, the coverage extends to help with the cleanup, although it will not cover the sump pump equipment if it failed.
This doesn’t cover you for water seepage into your basement, which would be covered by flood insurance.
Most Condo/Co-op communities have a Homeowners Association (HOA) that purchases a Master Insurance Policy to cover for all the common areas outside of the units. Stairwells, shared property areas, lobbies, pools, outdoor spaces, or even roofs are generally covered by the master policy.
What happens when damages from an incident exceeds the coverage that is provided? Condo/Co-op owners are expected to foot the bill. Instead of worrying about being assessed by the HOA, loss assessment coverage provides exactly that.
For example: A major hailstorm occurs and causes $550,000 in damage to the building and roof. While the master policy will cover $500,000, there is still $50,000 in damage, which leaves the condo residents to pay the remainder out of pocket. Loss assessment coverage will pay for the damages you as a unit owner incur.
So, Now That You Know The Basics…
How Can We Help You Further?
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Keep On Learning…
Okay, so now you’re an expert on the basics of home insurance. Time to face Izzy and test your knowledge!
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