Homeowners Insurance

Homeowners insurance is required by banks and other lending institutions when you have a mortgage. However, it is not a requirement by state law. Your lender will request proof of homeowners insurance before lending money to you. If you do not have coverage for your home, the lender will notify you about purchasing a policy and charge you accordingly. If your lender buys coverage for your home, that policy may provide coverage for the lender only. It may be more expensive than buying protection for your home yourself.

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Standard homeowners insurance has coverage to shield policyholders from financial loss when a covered loss occurs. It helps you to pay for damages to your home and personal property from perils such as:

• Theft
• Riot or Civil Commotion
• Vandalism
• Explosions
• Fire or Lightning
• Hail or Windstorm
• Weight of Snow, Ice, or Sleet
• Artificially Generated Electrical Current
• Smoke Damage: Sudden or Accidental
• Water Damage (From Leaking Roofs, Water Heaters, Broken Pipes, Washing Machines, or other appliances but not from flooding)

Perils such as earthquakes and floods are excluded from standard policies. Policyholders need to purchase additional coverage in case they live in an area prone to flooding or earthquakes.

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Homeowners coverage combines more than one type of coverage into one policy. There are four types of coverage contained in the policy, dwelling and personal property, liability, medical payments, and additional living expenses.

Dwelling and Personal Property Coverage

The dwelling is the most important part of the homeowner’s policy. It includes the primary home and any buildings or additions that are permanently attached. It is important to understand if your plan provides full replacement cost for damages. You will only receive a depreciated value for your house without full replacement, which will likely not be sufficient to rebuild your home to its prior condition.

Personal property coverage pays for your personal contents including household furniture, clothing, and other personal belongings. The amount of insurance is usually a percentage of the policy limit on your dwelling. If your property is stolen or damaged while you are away from home (or on vacation), then your policy may provide more limited coverage for your personal property.

Other structures are any other buildings or human-made constructions on the insured property. Examples of other structures include a fence, a decorative mailbox or a pool enclosure. As a rule of thumb, if an item is separate from the dwelling or could be removed without damaging the property, then it should be considered an other structure.

Personal Liability Coverage

Homeowners coverage provides personal liability coverage that applies to accidents (not including automobile accidents) on and off your property if the injury or damage is caused by you, a listed family member, or your dog (or any other pet that you may have).

The liability coverage in your policy will pay for both the cost of defending you and for any damages that a court may determine you are liable for. An important aspect to note regarding personal liability coverage, unlike the other coverage options in a homeowner’s policy, the liability coverage does not have a deductible that must be met before the insurer pays. The limit is usually $100,000 for each occurrence, but at your request, you may be able to obtain a higher limit for an additional cost.

Medical Payments Coverage

Medical payments coverage pays if someone outside your household is injured at your home regardless of fault and pays for reasonable medical expenses. In limited circumstances, the medical payments coverage may apply when you are involved in the injury of another person outside of your house.

Additional Living Expenses

ALE is coverage for temporary accommodation and other expenses away from home when a covered loss strikes your home. An ALE policy pays for reasonable bills above your ordinary living expenses while your home is being repaired or built. For example, if you spend $300 on meals monthly, any amount above $300 will be paid by ALE policy. Common compensations by ALE include:

• Moving Or Displacement Cost
• Hotel Or Apartment
• Meals
• Parking Fee
• Laundry
• Storage Cost

ALE is usually available with homeowner, renter insurance, or condo owner insurance policies. Remember ALE has limits for amounts it will reimburse a policyholder. Some policies have time limitations too. However, limitations are separate from the funds available to repair or rebuild your home. If you use up your ALE, your insurer will still pay in full for repair or to rebuild your home up to your policy’s limit.

Additional Coverage

While not included as one of the four primary types of coverage, additional coverage options are available. Examples include but are not limited to debris removal as a result of a covered loss, credit card coverage, identity theft, and mold.

In addition to the primary coverage of the homeowner’s insurance policy above, umbrella insurance may supplement the coverage that you have in place.

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Homeowner’s insurance is important to protect your most valuable asset for your family. The cost of home insurance can get expensive, but there are different ways you can save on your policy. Here are a few of them:

• Do you have a home security system? Depending on your provider, having a security system can reduce the cost of your policy.
• Do you live in a gated community? If the answer is yes, this can save you on your homeowner’s insurance policy.
• Does your house have adequate fire safety systems in place? This includes smoke detectors, carbon monoxide detectors, sprinkler system, heat detectors, fire escapes, and fire extinguishers. If your house is loaded up with these features, the cost of your policy may be reduced.
• How old is your electrical wiring? If you have new wiring, you may get a reduction in your premium.
• What type of roofing do you have? Roofs are typically graded from class 1 to class 4, class 4 being best. If your roof is graded class 4, you may get a home insurance discount for that.
• How is the plumbing in your home? If it is new, some insurance carriers will provide you with a discount.
• Do you have handrails on your staircase? As strange as that sounds, this can also make you eligible for a discount.
• Do you have a pool? If yes, is it surrounded by a fence? Having a fence around your pool is safer and may also save you money with your homeowner’s insurance policy.
• Is your home Green certified? If LEED certifies your home as Green, this may qualify you for a cost reduction.
• How is your credit score? Typically, the better your credit score the less expensive your homeowner’s policy will be.
• Have you made home insurance claims in the past? If you haven’t this may be a significant discount.
• Who do you have your other insurance policies with? If you bundle them through one carrier, you will often receive a discount on all of your policies.
• You’ve heard of a smartphone, but what about a smart house? If you have connected home technology, this may also offer a discount on your home insurance.

Saving on your home insurance policy means more money in your pocket. These discounts can vary from carriers to carrier, which is why it is best to purchase insurance through an independent insurance agency like Tatum Insurance LLC. We work with multiple carriers and can help you find the right coverage for your needs.

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