Rethink Your Home Insurance
Protecting Your Home and Family
The Homeowners Policy
Homeowners policies differ by which losses are covered, which coverages you choose, and what type of residence you own. You choose which policy is best for you, whether it’s a comprehensive policy that covers losses due to fire, hail, smoke, falling objects, vandalism and theft of personal property, or a policy that covers only specific losses you want protection for. The two types of homeowners policies, also know as multi-peril policies, you can choose from are:
- Specified Perils — Covers losses resulting from perils specifically listed on the policy.
- Special Form — Covers losses resulting from all perils that the policy doesn’t specifically exclude. (Also called Broad Form coverage.)
For additional premiums, other losses such as earthquakes can be covered.
Types of Homeowners Policies
The four types of homeowners coverage a policy provides are:
- Structural — Covers damage to your home or dwelling.
- Personal Belongings — Covers damage to items in or on your home or dwelling.
- Liability Protection — Covers your legal responsibility for injuries or damage to other people or property.
- Additional Living Expenses — Covers costs for temporary housing, meals, etc., while your home is being restored or rebuilt.
Structural and Personal Belongings coverages are available on an actual cash value (ACV) basis or at full replacement cost. ACV coverage considers the current market value of an item based on its age and condition. So, if you purchased a television for $500 four years ago, the value today would be significantly less than it was when you purchased it. ACV coverage would depreciate the item’s value to determine the current value. Full replacement cost considers the current cost to replace an item.
Remember to consider these points when you’re choosing your coverages:
- Your policy doesn’t cover damage caused by poor maintenance. If you haven’t fixed the plumbing for the last year and now your walls are rotted, the insurance company won’t dish out the fix-it funds.
- You must complete an inventory of your household. You can do this by completing a list by hand or by computer, taking pictures, or recording a video. Using two inventory methods, such as a computer list and pictures, can help expedite the claim resolution process.