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Homeowners Insurance

Homeowners insurance is one of the most popular forms of personal lines insurance on the market today. The typical homeowners policy has two main sections: Section I covers the property of the insured and Section II provides personal liability coverage to the insured. Almost anyone who owns or leases property has a need for this type of insurance. And many times, homeowners insurance is required by the lender as part of the requirements in obtaining a mortgage.

Covered losses under a homeowners policy can be paid on either an actual cash value basis or on a replacement cost basis. When "actual cash value" is used the policyowner is entitled to the depreciated value of the damaged property. Under the "replacement cost" coverage, the policyowner is reimbursed an amount necessary to replace the article with one of similar type and quality at current prices.

[Note: this answer is based on the Insurance Services Office's HO-3 policy.] Coverages A and B provide protection to the dwelling and other structures on the premises on an all risks basis up to the policy limits. The policy limit for Coverage A is set by the policyowner at the time the insurance is purchased. The policy limit for Coverage B is usually equal to 10% of the policy limit on Coverage A. Coverage C covers losses to the insured's personal property on a named perils basis. The policy limit on Coverage C is equal to 50% of the policy limit on Coverage A. Coverage D covers the additional expenses that the policyowner may incur when the residence cannot be used because of an insured loss. The policy limit for Coverage D is equal to 20% of the policy limit on Coverage A. The coverage limit on Coverage E - Personal Liability - is determined by the policyowner at the time the policy is issued. The coverage limit on Coverage F - Medical Payments to Others - is usually set at $1000 per injured person.

Coverage C, which provides named perils coverage, applies to all your personal property (except property that is specifically excluded) anywhere in the world. For example, suppose that while traveling, you purchased a dresser and you want to ship it home. Your homeowners policy would provide coverage for the named perils while the dresser is in transit - even though the dresser has never been in your home before.

Direct damages due to earthquakes are not covered under the standard homeowners insurance policy. However, unless you live in an area that is prone to earthquakes, you probably do not need this coverage. If you do live in a part of the country with high earthquake activity you may want to consider adding an earthquake endorsement to your homeowners insurance policy. This endorsement will cover damages due to earthquakes, landslides, volcanic eruptions and other earth movements.

There are a number of factors you should consider when purchasing any product or service, and insurance is no different. Here is a checklist of things you should consider when you purchase homeowners insurance. First and foremost, purchase the amount and type of insurance that you need. Remember that if your policy limit is less than 80% of the replacement cost of your home, any loss payment from your insurance company will be subject to a coinsurance penalty. Also, determine the amount of personal property insurance and personal liability coverage that you need. Second, determine which, if any, additional endorsements you want to add to your policy. For example, do you want the personal property replacement cost endorsement or the earthquake endorsement? Finally, once you have decided on the coverage you want in your homeowners insurance policy, you can now decide which insurer you would like to purchase the insurance from. Some people like the idea of purchasing insurance from a mutual company rather than a stock company. You should also decide whether you would like an insurance agent to assist you in your purchasing decision or if you would like to buy the product directly from an insurer without the assistance of an agent.

A named perils policy covers losses that are due to only those perils listed in the policy. The perils typically covered include fire, windstorm, hail, and other direct physical losses. An all risks policy covers losses that are due to any peril except those specifically excluded in the policy. It is important to note that all risks policy provides broader protection than do named perils policies.

There are a number of things you can do to lower the cost of your homeowners insurance. The best thing to do is to shop around. It is not surprising to find quotes on homeowners insurance that vary by hundreds of dollars for the same coverage on the same home. When you shop, be careful to make sure each insurer is offering the same coverage. Many insurers use the ISO policy forms, but this is not always the case. Another way to lower the cost of your homeowners insurance is to look for any discounts that you may qualify for. For example, many insurers will offer a discount when you place both your automobile and homeowners insurance with them. Other times, insurers offer discounts if there are deadbolt exterior locks on all your doors, or if your home has a security system. Be sure to ask your agent or company about discounts any that you may qualify for. Another easy way to lower the cost of your homeowners insurance is to raise your deductible. Increasing your deductible from $250 to $500 will lower your premium, sometimes by as much as five or ten percent. However, be careful to make sure that you have the financial resources necessary to handle the larger deductible.

Insurance contracts are conditional contracts, which means that policyowners have certain duties that they must perform if a covered loss occurs. Failure to complete these actions can, and sometimes does, result in non-payment by the insurance company for losses that otherwise would have been covered. Required duties include: (1) notifying the insurance company or the agent that a loss has occurred -- this should be done as soon as you discover the loss; (2) protecting the property from further damage and/or to making any repairs necessary to prevent further damage; (3) preparing a detailed list of the personal items damaged which contains a description of the items, their actual cash value, or their replacement cost if you have added the replacement cost endorsement to your policy; (4) being prepared to show the company and/or the insurance agent the damaged items; (5) completing a statement for the insurance company that details the events that led to loss -- for example, the time the damage occurred, the cause of the losses, etc.

In the unfortunate event that you are sued, your homeowners policy will not only cover the cost of your legal defense, but your insurance company will also provide the legal counsel.

Condominium Insurance

Yes. The association's master policy only basically covers the general building structure if it were to burn down for example, but not for your personal belongings, decorations, and furnishings inside of your condo. Also, the association's master policy only carries liability for the premises outside of your door. Should anyone sustain bodily injury inside of your condo, your own personal condo insurance policy would protect you up to the limits of liability that you purchase.

No. This is a common mistake people make. Earthquake insurance is generally offered to you when you purchase a condo policy, but rarely do people accept it because it is priced so high. Generally it is best to purchase a separate policy for the peril of earthquake and there are many reasons to do so. For more information on earth quake insurance, we recommend visiting www.BuyQuakeInsurance.com for all of your earthquake insurance needs.

Be sure to purchase a condo insurance policy that has enough property coverage to adequately cover you to replace not only the belongings, decorations, and furnishings you have now, but at the time of the loss. Also, be sure that your policy contains the replacement cost valuation endorsement for a few dollars more. It is generally always worth the few extra dollars because what it does is, it will replace your old belongings with new belongings. Also, be sure the liability limit is adequate to cover any potential loss you think you might have and certainly at the very, very least, one that will protect your assets.

Renters Insurance

Renters insurance is important to have, if for no other reason, because it gives you liability coverage should you accidentally injure someone somehow (other than in a car accident, in which case your car insurance policy will generally respond to those claims. See www.InstantCarInsurance.com for more details.). And it provides protection for your personal belongings. Always be sure to purchase a renters insurance policy that has enough property coverage to adequately cover you to replace not only the belongings, decorations, and furnishings you have now, but at the time of the loss. Also, be sure that your renters insurance policy contains the replacement cost valuation endorsement for a few dollars more. It is generally always worth the few extra dollars because what it does is this: It will replace your old belongings with new belongings. Also be sure the liability limit is adequate to cover any potential loss you think you might have and certainly at the very, very least, one that will protect your assets.

The simple answer here is yes. No long explanation needed.

Generally yes. Some renters insurance policies can exclude theft, and often this is the case when a person has had more than one theft claim or perhaps lives in what is considered a high theft area and/or does not have adequate safeguards to protect their belongings. Be sure your renters insurance policy contains theft coverage.

Family Health Insurance

Yes. You can buy health insurance for only your children. Please visit our Health Insurance section for tips on how to buy affordable health insurance.

It depends on where your child is attending school, how long they will be gone, and what type of coverage your child has under your policy when living perhaps in another state, as to whether it is best to keep them covered under your policy of buy a student health insurance plan for them. Most policies have out-of-area coverage but for emergencies services only. Be sure to read your policy carefully or consult with a qualified health insurance professional about your coverage. There are pros and cons of doing either and you must assess your situation accordingly based on what coverage you have and what coverage you may need, weighed against the costs.

Please visit our health insurance FAQ page for more answers to health insurance questions. Thank You.