| Smart owners of their own homes have bought a | | | | know what the outbuilding is used for before issuing |
| Homeowner policy to protect against losses to, or | | | | the policy. |
| on, their property. It is wise to have this coverage as | | | | The third subsection covers contents of the home - |
| the home is usually the largest and most important | | | | such things as furniture, clothing, appliances (except |
| investment of any person or family, and needs this | | | | those that are built in to the home, which are |
| kind of protection. | | | | covered in the limit for the house). With most |
| Until recently, to adequately cover all the misfortunes | | | | policies, there are limitations on certain high value |
| that might befall a homeowner, the owner had to | | | | contents such as artwork, antiques, jewelry and gold |
| buy separate policies - sometimes 3 or 4 different | | | | or silverware. These items can be covered for their |
| ones addressing losses by fire and other causes to | | | | full value by scheduling them and paying a small extra |
| the home, and perhaps another on for the contents | | | | premium. The amount the policy provides for this |
| of the home, a theft policy and a liability policy. Some | | | | subsection is usually 50% of the amount on the |
| years ago, however, the Homeowners policy, which | | | | house, but recently it has become common that this |
| is a 'package' of all the needed coverage, was | | | | amount is automatically 70% of the house value. The |
| devised and is now sold throughout the US. This | | | | homeowner cannot get a premium credit for reducing |
| policy is widely available, and usually provides all the | | | | this limit, nor for reducing the Other Structure |
| protection a homeowner might need for a very | | | | limit...they are set percentages of the house limit. |
| affordable price. | | | | The forth subsection is for Loss of Use or Extra |
| The Coverage Sections | | | | Expense, meaning the insurer will reimburse the |
| Most insurers who sell this package policy follow the | | | | homeowner for the added living cost of a hotel or |
| same format - there is one section covering the | | | | motel, meals away from the home and other |
| direct, and indirect, losses to property, and a second | | | | incidental extra costs when the home is temporarily |
| section with liability protection. The first section | | | | not habitable. This limit is usually 40% of the amount |
| contains 4 subsections - one for the dwelling | | | | of insurance on the house. You will be asked by the |
| structure, a second for 'other structures', a third | | | | insurer to keep track of these expenditures to |
| covering personal or contents property, and a forth | | | | support your claim, if this subsection is needed. |
| which provides reimbursement if losses from the first | | | | Liability Coverage |
| three mean that the property is not habitable, and | | | | There are two subsections of the second part of |
| the homeowner and family need to live temporarily | | | | the policy - the first is liability coverage for bodily |
| off the premises. The first of these, the subsection | | | | injury or property damage caused by you on your |
| covering the house, generally governs the limits of | | | | property and the affected person or persons decide |
| the other three, which are typically percentages of | | | | to sue you. Your dog bites a visitor, or a neighbor's |
| the amount on the home itself. | | | | child falls and is hurt as a result of your alleged |
| Although some insurers offer coverage on an 'actual | | | | negligence. This is where the policy comes into play. |
| cash value' (ACV) basis, this means depreciation will | | | | The usual limit for these kinds of issues is a minimum |
| be applied to property that is damaged and it will not | | | | of $50,000 per event, or occurrence, but higher limits |
| be replaced with new property. Virtually all modern | | | | - much higher - are readily available, not very |
| homes should have the replacement cost feature, | | | | expensive and are certainly recommended. |
| which gives the homeowner 'new for old' in the claim | | | | The second subsection in this part of the policy is for |
| process. It costs very little more than the ACV basis, | | | | Medical Payments. This coverage, simply pays for the |
| and it makes little sense to replace damaged | | | | cost of first aid and minor medical costs for someone |
| property with older, used, materials. To adequately | | | | on your property (but NOT for you or family |
| replace the damaged property the homeowner would | | | | members). There does not have to be a lawsuit to |
| have to pay the difference between the cost of | | | | invoke this kind of payment, and its purpose is to |
| new and old, depreciated property. And remember, | | | | hopefully preclude the need for a suit against the |
| the basic Homeowner policy does not cover either | | | | homeowner. |
| earthquake or flood damage - those coverages, if | | | | In most policies these days, the insurer will include a |
| they are required, need to be purchased in addition | | | | small limit, say $250 or $500 for what is termed |
| to the HO policy. | | | | 'voluntary property damage'. This, like the medical |
| In determining how much insurance to buy on the | | | | payment coverage, is responsive to relatively minor |
| house, the homeowner should take care not to | | | | damages to property of others the homeowner may |
| include the value of the land, often a large | | | | cause or that may happen on the premises - a |
| percentage of the property's 'market value'. | | | | camera of a visitor is dropped and damaged by the |
| Homeowner policies do not cover the land upon | | | | homeowner or a family member. The amount is paid |
| which the home is built, so it would mean paying for | | | | by the insurer without the need for a lawsuit. |
| limits one cannot use to include the value of the land. | | | | Deductibles |
| 'Other Structures, the second subsection, addresses | | | | All of the property losses (except for Extra |
| items such as fences, outbuildings, guest or pool | | | | Expense) have a deductible requirement - the |
| houses. The limit for these properties is typically 10% | | | | homeowner must incur the first $250 or $500 per |
| of the amount on the dwelling, but if the value of | | | | loss (or, more recently $1000 per loss) before the |
| such other buildings is more than the 10% amount, | | | | insurance company begins to pay. There are no |
| this limit can be increased at very little extra premium. | | | | deductibles for the liability section. |
| The insurance company underwriter may wish to | | | | |