Homeowners insurance protects your:
- Home (primary or secondary)
- Personal property
- Cost of additional living expenses (following a loss)
- Personal liability
- Medical payments (no fault coverage)
Similar to Commercial Property coverage, you are required to insure your property (your home, condo or apartment) to the full value. There are two primary valuation methods used by insurers: Replacement Cost Value (RCV) and Actual Cash Value (ACV). Note that insurers do NOT use market value.
Their concern is the cost to either replace your loss in full (RCV) or pay you on a depreciated basis (ACV). Failure to insure to the full values can create a penalty at time loss called the Coinsurance penalty. These items should be discussed and evaluated with a qualified agent.
In a report by the Insurance Information Institute, it was shown that the most common types of losses are wind/hail and the most severe types of losses are fire. Many of the more severe claims rose well above $500K-$2M. Protect your property and liability related to your household exposures with Homeowners Insurance from Shields Insurance.
Coinsurance clauses require you to insured your home to full value, otherwise you may incur penalties during a claim. Be sure you are using adequate valuations for your house.
If your house is vacant for more than 60 days, then your insurance carrier may impose several coverage restrictions (i.e. exclusion for Vandalism, Theft, Water Damage, etc.). You may be eligible to purchase an insurance policy designed to more adequately protect your home. Often, insurance carriers will cancel or non-renew your homeowners policy if they discover vacancy.
If you move out of your home and begin to rent it to others (or if you start renting your secondary or doing Air BNB, etc.), then you should inform your insurer because there are different underwriting requirements and coverage may cease (or become restricted) if this exposure is not disclosed.
Floods & Earthquakes
If your home has high-risk exposure to floods or earthquakes, then you should consider purchase of a separate policy. Normally, homeowners policies exclude coverage for flood or earthquake.
If your property is near a coastal shoreline, then wind coverage may be an issue. Beware of special deductibles or outright exclusions for wind/hail. If you are in a “Tier 1” area, always try to negotiate a “Named Storm” deductible, rather than a “Wind/Hail” deductible, since the former is less restrictive.
Homeowners Insurance, clearly, won’t protect you from every type of exposure you may face. As a result, there are other types of insurance designed to meet your entire needs.
Here are a few:
>> LEARN ABOUT OTHER PERSONAL INSURANCE SOLUTIONS