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Insurance Info
Many of us have invested a lot in our homes, both financially and emotionally.
Our home is often our single greatest asset. And we spend considerable
time and expense making it into a special place that reflects our personality
and lifestyle. Homeowners insurance is a way to safeguard that investment
of time and money. It provides financial protection against damage to
your home and your possessions, and also covers injuries or property damage
your family members may cause to others. While you are not legally required
to have homeowners insurance, if you finance your home with a mortgage,
your lender will require that you buy insurance. And even if your mortgage
is paid off, homeowners insurance is a smart way to protect one of your
greatest investments. It's important that you periodically reevaluate
the amount of insurance you need, especially if you remodel or make other
improvements to your home.
What a standard homeowners policy covers
A standard homeowners insurance policy covers the structure of your home,
your belongings, injury or property damage to others, and living expenses
if you are temporarily unable to live in your home because of fire or
other insured disaster. Most policies include the following benefits:
The policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hail, lightning or other disaster listed in your policy. Most standard policies also cover structures that are detached from your home such as a garage or tool shed.
Your furniture, clothing and other personal items are insured against theft, fire, or other insured disaster. Your policy may also include what is called ''off-premises coverage'', which covers your belongings anywhere in the world.
The policy normally covers the legal costs for bodily injury or property damage that you or family members, including your pets, cause to other people. This includes the cost of defending you in court and damages that may be awarded. As with your personal belongings, you are usually covered not just in your home, but anywhere in the world. Policies also provide medical coverage in the event someone other than your family is injured in your home.
Hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt are covered. If you have renters in your home, the policy also reimburses you for lost rental income that you would have collected if your home had not been damaged.
Do you need additional flood or earthquake insurance?
A standard policy does not pay for damage caused by a flood or earthquake.
Your mortgage company can let you know if your area is flood or earthquake-prone.
Even if it's not required, many people decide that the relatively small
additional expense of flood or earthquake insurance is worth the peace
of mind it provides.
Flood insurance. If you want to buy, build or remodel a home located in a Special Flood Hazard Area, you are required to purchase flood insurance. Your lender will let you know if your home is located in one of these areas. Normally, a flood policy covers the replacement cost for the structure of your home, but only the actual cash value of your possessions. You can purchase flood insurance directly from your homeowners insurance agent. If your agent does not offer flood insurance, call 1-888-FLOOD29 and the National Flood Insurance Program (NFIP) will direct you to someone in your area who does. You can find additional information on flood risk and insurance at the NFIP website http://www.fema.gov/nfip/cost1.htm
Earthquake insurance If you live in an earthquake-prone area, consider an earthquake insurance policy. The cost can vary widely depending on several rating factors. Generally, older homes cost more to insure than newer homes and retrofitting is important for homes built prior to 1960. Most residential policies offer 10 percent or 15 percent deductibles. If the structure of your home is insured for $100,000, with a 10 percent deductible, you would be responsible for paying the first $10,000 in damages. Earthquake insurance is available from most insurance companies. In California, it is also available from the California Earthquake Authority at http://www.earthquakeauthority.com.
