Guy Hatfield, CPCU is the President of Hatfield Insurance Agency in Fairfield, CT.
The homeowners (HO) policy is probably the most ubiquitous insurance contract around. Yet, few understand what is provided-or not provided in the document. The homeowners policy is a "packaged" contract that insures your home, contents, detached buildings on your property such as garages and barns, and expenses necessary if you have to live elsewhere because of a loss. The perils insured against include the most likely losses such as fire, wind, smoke, explosion, water damage from busting pipes, theft, as well as others. The policy does not insure against flood. The latter policy can be purchased through the government. In addition, the HO policy insures against injuries and property damage due to your negligence such as when someone slips on that doorstep you didn't get around to shoveling or when your semi vicious dog bites the mailman.
Many people think that the HO policy is just for owners of dwellings. Those that own condominiums, cooperatives, or rent an apartment also need the coverage and the contract language is the same.
Although the contract is broad, there are several noteworthy limitations on items such as jewelry, furs, silver, and stamp and coin collections. You can purchase higher limits through a "schedule" or "floater” for an extra premium.
Insurance Companies usually provide a "replacement cost guarantee" which essentially states that in the event the limit on the structure is insufficient to rebuild from a total loss, they will pay the additional cost-but up to a point. The wording can be tricky and therefore it is important to determine the proper replacement cost of your home at the onset. If you do not insure to at least 80% of the replacement cost, you could be penalized for any partial loss and the guarantee will not apply.
Most HO policies will provide ample coverage for contents and with the "replacement cost endorsement" you will be covered on a "new for old" basis without depreciation. Most policies provide this endorsement automatically but it is important to make sure it is included.
It is recommended that you inventory your contents. The best way is to video each room. Narrate details on items of particular interest and value. Keep the video somewhere other than your home so it will not be destroyed from a loss. The video will be very helpful in settling a claim.
The homeowners policy is designed to protect the most important investment you have. The premium is comparatively modest. Be sure to choose a company that is highly rated and experienced in insuring homes. Choose one that will work with you and your contractor. As in any insurance matter, deal with an insurance professional that is knowledgeable and who will be there for you.
Comments