WHAT IS HOMEOWNERS INSURANCE?

Homeowners policies offer a comprehensive package of protection against losses or damage to your home and it’s contents. Perils covered include fire, windstorm, vandalism, theft and personal liability, among others. In addition to coverage to the structure, homeowners policies usually contain additional types of coverage: additional living expenses, personal liability and medical payments.

IF I OWN A CONDOMINIUM DO I NEED HOMEOWNERS INSURANCE?

Another type of homeowners insurance is for condominium owners. This type of policy covers contents and property not covered by the condominium association's policy. Many association policies do not provide coverage for infrastructure, such as inside walls, electrical, plumbing and heating systems and appliances. A representative at Caruso Insurance can review your association’s master policy to determine what it covers.

I RENT, WHY DO I NEED HOMEOWNERS INSURANCE?

In addition to its availability to homeowners, similar coverage is available to those who rent homes or apartments. These policies are referred to as tenants or renters policies. If you are a renter, you do not need protection against damage to the building itself, but you do need protection against damage to or theft of your personal property and liability in the event someone falls or gets hurt on the part of the premises you rent. Your landlord’s policy specifically excludes coverage for your property.

HOW MUCH COVERAGE DO I NEED?

Your homeowners policy should provide enough coverage to pay you to rebuild your home in the event of a loss. This value is based on the size, age, construction, location and special features of your house. The market value, mortgage amount and original purchase price are not the proper way to determine replacement value. A representative from Caruso Insurance can prepare a no-obligation replacement cost estimate to determine if you have adequate coverage.

WHAT ARE THE DIFFERENT TYPES OF HOMEOWNERS POLICIES?

There are six basic types of homeowners policies offered by most companies. They are generally referred to as Forms 1, 2, 3 and 8 for homeowners; Form 4 for tenants or renters; and Form 6 for condominium owners.

HOMEOWNERS BASIC FORM (HO1)

Known as a named peril policy in that only those perils specifically named in the policy are insured against loss. Covers damage due to: fire or lightning, windstorm or hail, vandalism or malicious mischief, theft, damage from vehicles and aircraft, explosion, riot or civil commotion, glass breakage, smoke, volcanic eruption and personal liability.

HOMEOWNERS BROAD FORM (HO2)

Also known as a named peril policy. Covers damage due to perils listed in Form 1, plus building collapse; freezing of or accidental discharge of water or steam from internal plumbing, heating, air-conditioning systems or domestic appliances; falling objects; weight of ice, snow or sleet; rupture or bursting of steam or hot water heating systems; and personal liability. Form 2 is broader than Form 1.

HOMEOWNERS SPECIAL FORM (HO3)

Also known as an "all-risk" policy in that all perils are insured against loss except those specifically excluded. Exclusions include but are not limited to earthquake and flood, for damage to or loss of the home (dwelling) or other structures such as a garage; all perils covered by Form 2 for damage to or loss of personal property (contents); and personal liability. Special personal property coverage for items such as guns, furs, jewelry, computers and other goods can be added to Form 3 with Endorsement HO-15 for a higher premium. Form 3 is more comprehensive and offers more protection than Forms 1 and 2.

TENANT HOMEOWNERS FORM (HO4)

Coverage for personal property for all of the perils covered under Homeowners Form 2 and personal liability.

CONDOMINIUM HOMEOWNERS FORM (HO6)

Form 6 is designed for condominium owners to cover their personal property and liability, their portions of the building and loss of use from the same perils as Form 2.

HOMEOWNERS OLDER HOME FORM (HO8)

Also known as a "Market Value" policy. Form 8 is for the owner of an older home who has trouble purchasing standard homeowners insurance. It resembles other homeowner policies, but provides limited theft coverage, and loss settlements are based on actual cash value.

WHAT IS OTHER STRUCTURES COVERAGE?

Coverage against damage to an unattached garage or other structures on your lot such as sheds or fences. Usually, this coverage is limited to 10 percent of the amount of insurance on the house. For example, under a $100,000 policy, the most you will receive to rebuild your damaged garage is $10,000 unless you specifically request and obtain an increase on this amount prior to your loss.

WHAT TYPE OF COVERAGE IS THERE FOR MY PERSONAL PROPERTY?

Coverage against damage to or loss of personal property (includes household contents and other personal belongings). Homeowners insurance policies (except Form 4 for tenants and Form 6 for condominium owners) include an additional amount of insurance for loss or damage to personal property (contents), usually based on 50 or 70 percent of the insurance on your house. For example, if your house were insured for $100,000 your coverage for contents would be $50,000. The contents coverage is usually provided on an Actual Cash Value basis, not replacement cost. However, most companies offer a replacement cost option for your personal property at an additional cost. Caruso Insurance highly recommends obtaining replacement cost coverage. The amount of the contents coverage also can be increased if you need additional protection. On Tenants Form 4 and Condominium Owners Form 6, you must request and obtain the specific amount of coverage you need. If you temporarily reside at another location while on business or vacation, your contents coverage at your principal home would continue to apply. Personal belongings brought with you to a temporary address are insured for 10% of your homeowners policy contents coverage unless you ask for a higher limit. For example, a son or daughter attending college would be provided with $1,000 worth of insurance or 10% of your contents coverage (whichever is greater) for the personal property he or she takes to school.

WHAT IS REPLACEMENT COST COVERAGE ON CONTENTS?

Personal belongings or contents are covered for their "Actual Cash Value" or their depreciated amount. For example if a television were stolen you would be paid based on the television actual cash value or basically the amount you would get if you sold it at a garage sale, with replacement cost coverage you will.

WHAT IS GUARANTEED REPLACEMENT COST COVERAGE?

This is one of the most important endorsements to have on your homeowners insurance policy. Guaranteed replacement coverage ensures that your policy will provide enough coverage to rebuild your home even if the cost to rebuild exceeds the dwelling coverage limit on your policy. For example if you have $100,000 of coverage on your home but after a loss the cost to rebuild is $120,000. You will be paid the $120,000 if you have guaranteed replacement cost coverage. This endearment also ensures that you do not have a co-insurance problem.

AM I COVERED IF I AM SUED?

The personal liability coverage protects you against a claim or lawsuit resulting from (non-auto and non-business) bodily injury or property damage to others caused by your negligence. This coverage applies to you and all family members who live with you. Basic amounts of coverage are usually $100,000 per occurrence. However, in most cases higher limits are needed and are available at very little extra cost.

WHAT IS MEDICAL PAYMENTS COVERAGE?

The policy includes coverage for the medical expenses of others that suffer accidental injury at the insured location. This expense is paid regardless of your legal liability. Basic amounts of coverage are usually $1,000 per person for medical payments. You can obtain additional amounts at minimal cost, if you request them.

COVERAGE FOR ADDITIONAL LIVING EXPENSES?

The policy includes an additional amount of insurance to cover the necessary increased costs in living expenses to permit you to continue your normal standard of living during the time your house cannot be occupied due to a covered loss.

Homeowners Exclusions and Other Coverages

Important Limitation on Losses Resulting from Freezing:

When water escapes from the heating system or the hot water heater ruptures as a result of freezing, the loss is covered on all homeowners forms (except Form 1 and Form 8) with one important limitation. Specifically, coverage does not apply if the premises are vacant or unoccupied when a loss occurs, and the insured has not taken reasonable care to maintain heat in the building or shut off the water supply and drain the system and appliances of water.

Damage from Flood is Excluded from All Homeowners Forms:

An important exclusion in all homeowners policies is loss due to flood. Flood insurance can be purchased for any insurable property, even if it is not located in a flood plain. Coverage for flooding is obtainable separately from your homeowners policy and can not be endorsed onto your homeowners policy. If you live in an area prone to flooding, you are encouraged to purchase this coverage.

Important limitation on silverware, silver, jewelry and furs:

There is generally a limit of $200 coverage on silver coins and silver other than silverware. Silverware and silver-plated ware are limited to $2,500 for loss by theft. Theft coverage provided for jewelry and furs is limited to $1,000. Coverage provided for computers is limited to $1,000. These coverages can be broadened and amounts increased by adding a scheduled personal property endorsement sometimes called a floater, to your policy. This endorsement lists each covered item and its insured value and provides coverage when added to the policy.