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Understanding Your Policy Options

Different Parts of the Policy:

Declarations Page

The declarations page is typically the first page in your insurance policy paperwork. This page provides an overview of the policy and lists basic information such as: the full name and address of the named insured, a basic description of the property, the dollar amount of the coverage limits, the name of the insurance company, and the total premium.

Definitions

This section of your insurance policy explains the terms of the policy and helps you to better understand your coverage.

Coverages

The coverages page of your policy lists and defines the coverages provided by the insurance policy.

Exclusions

The exclusions section of your policy clarifies exactly what is not covered by your policy. It is very important that you read over this section so that you have a clear idea of what is and is not covered by your policy.

Conditions

The conditions section of your policy illustrates the responsibilities of both parties involved in an insurance policy. For example, this section describes your duties as a policyholder, and the procedures that the insurance company must follow.

Endorsements

The endorsements section of your policy lists any amendments, attachments, or riders added to your policy that add, remove or change the standard coverages automatically provided. Endorsements represent optional coverages and features that you may want to buy, however you may need to pay an additional premium.

Since many coverages and forms are unique to the insurance carrier and the state that you live in, it's best to speak to a Consumer Advocate about your situation. Click here to request a quote.

Typical Homeowners Forms:

Limited Form (HO-1)

The HO-1 form is the most basic homeowners insurance policy, and only provides coverage for 10 specifically named perils, such as fire, theft, and vandalism.

Broad Form (HO-2)

This form only covers damage caused by 16 specific perils named in the policy. The distinct named perils include damage caused by fire and lightning, weather related perils such as wind or hail, theft, vandalism, damage from vehicles or aircraft, explosion, riot or civil commotion, glass breakage, smoke, building collapse, rupture or bursting of pipes, and falling objects.

Special Form (HO-3)

The HO-3 is the most popular and comprehensive of all the homeowner forms. This form covers damage damage caused by all perils unless specifically excluded in the policy. The most common exclusions are flood, earthquake, mudslide, landslide, and acts of war.

Fire & Extended Coverage

A fire and extended coverage policy is a very basic policy that covers only your home and no other structures or personal items on your property for losses due to a few specific named perils. Other structures on your property, such as a garage or shed or your personal items, may be available for coverage under certain endorsements offered by your insurer.

Dwelling Policy

A dwelling policy is a basic policy that provides more coverage than a fire and extended coverage policy, however your personal property is not covered under a dwelling policy.

Mobile Home Insurance

A mobile home insurance policy is a specific policy written just for mobile homes that includes coverage for the home itself, as well as theft and liability coverage.

Renters Insurance

There is a specific policy written just for renters called the HO-4 or Tenants Form. It does not cover the actual building itself because the property owner would be responsible for insuring the structure.

Tenants Form (HO-4)

The HO-4 or Tenants Form insures the personal belongings of the renter and also provides coverage for personal liability, loss of use, medical expenses, and additional living expenses.

Condominium Unit Owners Insurance

Condominium associations typically purchase policies to cover the outside walls of a building and any other common walls and walkways. However, it is the responsibility of the condo owner to purchase an insurance policy to cover the part of the property that they own.

Condominium United Owners Form (HO-6)

The HO-6 or Condominium Unit Owners Form provides coverage for the property owned by the condo owner and is similar to a homeowners policy.

Market Value vs. Replacement Cost:

Market Value Coverage

A market value policy would pay you the market value of your home as it is worth on the market today.

Replacement Cost

A replacement cost policy would pay you the amount of money it would take to replace your home using similar quality construction materials, without taking depreciation into consideration.

Additional Coverages Available (without an additional premium):

Loss of Use

Loss of Use coverage provides coverage for additional living expenses that you would need to pay if your home was damaged and you couldn't stay there while it was being repaired or replaced. If part of your home is rented to others, this coverage would also pay you for the lost rental income.

Personal Liability

Personal liability insurance protects you and other members of your household if you are responsible for injuring someone or damaging someone else's property as a result of your actions or negligence. Injuries as a result of an auto accident are not included under personal liability because they would be covered under your personal auto policy.

Medical Payments to Others

Medical payments coverage provides medical expense payments to others who are injured on your property by you, a family member, or a pet, regardless of who is at fault. This coverage does not apply to you or any other members of your household who live on your property.

Flood Insurance:

National Flood Insurance Program (NFIP)

Because standard homeowners policies do not cover damage caused by flood, Congress created the National Flood Insurance Program (NFIP) to help provide a way for property owners to protect themselves. Coverage is offered to people who live in communities that participate in the national program.

The average flood insurance policy costs just $570 per year, and the rate is set by the government and does not vary between different insurance companies or agents. The flood policy provides coverage for both your building itself building and its contents, but does not provide coverage for the land your home is built on.

Optional Coverages You May Want to Ad:

Extended Replacement Cost

Extended Replacement Cost coverage provides coverage in addition to the coverage automatically included in the standard policy and is generally limited to 20 or 25% of the home's value.

Contents Replacement Cost

This line of coverage is typically added to each homeowners policy so that a person's contents will be covered on a replacement cost basis instead of an actual cash value basis.

Inflation Guard Endorsement

This endorsement provides coverage to protect the policyholder against inflation. If the replacement cost of a home is steadily increasing with inflation, the policy amounts must also be increased to maintain coverage of at least 80% or higher.

If you purchase a policy today that would cover at least 80% of your home replacement cost, that amount may not be enough to cover it in the future due to inflation. To keep up with inflation, this endorsement allows the insurance company to automatically increase the policy's limit throughout the policy period and upon each policy renewal by a pre-determined percentage.

Scheduled Personal Property Endorsement

The Scheduled Personal Property Endorsement or personal article floater covers valuable possessions such as fine art, jewelry, antiques, collectables, silverware, musical instruments and other high value items that may exceed the amount covered by the standard policy.

To make sure these high value items will be covered by your policy, they must be itemized and specifically listed under the Scheduled Personal Property Endorsement form.

Secondary Premises & Liability Coverage

Under the Secondary Premises & Liability Coverage endorsement, homeowners coverage may be applied to another property such as a vacation home. Secondary residences are not typically covered by the same homeowners policy that covers your primary residence.

Watercraft Endorsement

The watercraft endorsement provides personal liability and medical expense coverage to watercraft such as jet skis, yachts, small sailboats, and outboard motor boats.

Identity Theft Protection Endorsement

This endorsement provides coverage for losses due to identity theft.

Earthquake Insurance

Standard homeowners policies do not not cover damage as a result of an earthquake. For an additional premium, the earthquake coverage endorsement may be added to a homeowners policy and provides coverage for earthquake damage with a special deductible that applies to each separate line of coverage.

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