Package Policy Homeowner Policy

Homeowners Insurance is a package policy that covers damage or destruction of your home or contents and covers you and your family and protects you against lawsuits or liability if someone is injured or sustains property damage while visiting your home. 

If your dog bites your neighbor while she is delivering a plate of fresh-baked cookies to your door, you are covered! 

If a thunderstorm downs a tree and it falls on your neighbor’s roof, you are covered. 

Most homeowner policies do cover certain but damage caused by floods or earthquakes, or your own neglect is NOT covered by most policies. 

If you live in a flood or earthquake zone, you will have to buy separate policies to cover those disasters.  We will get to that in a moment!

Right now, let’s talk about what IS covered. 

Your home (the structure) – The cost to repair or rebuild your house if you sustain damage or destruction from fire, hurricane, hail, or lightning (check with your insurance agent to determine whether other disasters will be covered). 

Your policy will NOT cover flood, earthquake, neglect or poor maintenance of standard wear and tear.  It WILL cover your garage, shed or outbuildings on your property.  

Your home (contents) – The cost to replace stolen or destroyed personal items.  We will talk about ‘riders’ to your policy later. 

Riders cover antiques, large items, jewelry and other things that might not otherwise be reimbursed by your standard insurance policy. 

In the standard policy, you get about 50-70 percent of the total policy you carry on your home. 

So, if you have personal items that are worth more than that, you will want to consider a rider.  Remember that the standard homeowner’s policy also covers your belongings when you take them outside your home. 

This coverage is called ‘off premises’ and, unless you specifically delete this from your homeowner’s policy, you will be covered for theft or damage no matter where you take your personal items. 

So, for example, if you are traveling with your violin or your lacrosse stick and it is stolen or damaged, you should be able to file a claim against your property insurance policy and collect the value of the item, less your deductible.

Your liability – If a neighbor, friend or visitor sues you for bodily injury or property damage they sustained while on your property or in your home, your homeowner’s policy will cover that liability. 

It also pays for damage caused by your pets.  Most standard policies also cover you if your family is visiting elsewhere and damages something in your friend’s home. 

For example, if your son rides his bike into your neighbor’s fence and destroys the beautiful white pickets they recently built; your property insurance policy will pay for that damage.

Liability coverage usually starts at around $100,000, but you should consider $300,000 to $500,000 if you can afford it. 

You can also purchase what is called an ‘umbrella’ or ‘excess liability policy’ that will cover you for claims of up to $1 million.

Additional expenses – This coverage includes the cost of staying in a hotel if your home is destroyed by fire, the cost of meals and other expenses related to living away from home. 

You can purchase increased coverage for this part of your policy.  Standard coverage is about 20% of the total insurance on your home.

While every state has different laws regarding standard insurance policies and coverage, there are some uniform policy components, which include coverage for: 

Ø      Fire, smoke and lightening damage

Ø      Windstorm or hail damage and falling objects

Ø      Explosions

Ø      Civil disturbances

Ø      Damage caused by vehicles including aircraft

Ø      Vandalism or theft

Ø      Damage from the weight or impact of ice, snow or sleet

Ø      Overflow, freezing or cracking of pipes, water or steam damage from plumbing, heating units, dish washers, air conditioners or sprinkler systems

Ø      Damage from electrical current, not including damage to electronic or computer equipment. 

Homeowner insurance (including condos and co-ops) includes to numerous options:

Cash Value – Replaces your home and possessions in the amount of actual value, less depreciation.

Replacement Value – Covers the cost of rebuilding, repairs or replacement of your home and possessions with no deduction for depreciation. 

Extended Replacement Value - This policy pays a percentage over the policy limit (usually 20% to 25%) to rebuild your home and replace your belongings.

Guaranteed Replacement Value – Guarantees replacement cost no matter what the current cost to replace your home and possessions, even if that cost  exceeds the policy limits.

Condos and Co-ops – In addition to the standard and expanded policies noted above, you should explore the coverage carried by your board or association. 

While your own policy covers your personal belongings and your portions of the structure. 

An additional ‘master policy’, carried by the board or association will cover the common areas that you share with other owners (storage rooms, elevators, boiler rooms, corridors, lounges, lobbies, community centers and halls, pools, etc.)