HOMEOWNERS insurance is a package policy which includes coverage for the house, the contents of the house, additional living expenses (should you have to temporarily move out of the house), personal liability claims (for damages or injuries to other persons while they were in the house), and medical payments (to other persons injured in the house).
When shopping around for the policy that will best suit your needs, make sure to compare policy coverage, policy limitations, prices, conditions, exclusions, and complaint processes. Ask the following basic questions:
How much is the Premium?
Different insurers charge different premiums. The amount of the premium may be influenced by several factors. If the company sells its policies through an independent agent, the agent may have been able to get the most competitive prices, and savings could be passed on to you. On the other hand, if a company sells the policy directly to the consumer, it may be able to offer a lower price because it won’t have to pay a large commission to an independent agent. Ask for an explanation on how premium plans are computed and what kinds of payment options are available for you. Also ask what kind of discounts you can get if you have burglar alarms and fire protection devices (smoke detectors, alarms, and sprinklers) installed in your house.
What is covered?
Homeowners policies usually insure the house itself and the contents of the house for losses brought about by the following: fire or lightning, windstorm or hail, breakage of glass, explosion, riot or civil commotion, theft, aircraft, vehicles, smoke, vandalism and malicious mischief. Inquire if the policy covers water damage because some companies are beginning to exclude it.
The typical policy also covers loss of use as well as additional living expenses due to a covered loss. Liability coverage protects against injuries or damages to others caused by you, a member of your family, or pet. Medical payments insurance covers medical expenses to non-family members injured at your home. You may choose to buy additional protection beyond the standard coverage to cover acts or things that are not covered in the original policy.
What is not covered?
The following are “excluded” or not covered in the typical homeowners policy: Earthquake, flood, mold, earth movement (like soil erosion), and wear and tear. When an insurer writes your coverage, it is legally obliged to offer you earthquake coverage for an additional premium. You should always read the exclusions in your insurance contract. You cannot simply assume that you are covered on certain losses when you may not be.
What are the policy limits?
The “dwelling” limit is the cost to replace your home in the event of a total loss. This amount may be lesser than the purchase price or current market value of the home. It is not governed by the real estate market but by the cost of the materials and labor spent in rebuilding the home. Every time a policy is renewed, the information affecting the dwelling limits should also be updated to reflect current changes to cost of materials and labor.
The “contents” limit is the cost to replace personal possessions in the home. Personal property includes furniture, small appliances, kitchen utensils, linens, window covers, clothes, shoes, accessories and other personal items. Consider all of your personal properties when computing the contents limits.
Will the policy totally replace a destroyed home?
There are two types of policy you can purchase: a replacement cost value policy or an actual cash value policy. The actual cash value policy will not totally replace the home. Actual cash value (if not specified in the insurance contract) may be interpreted to mean fair market value, which may not be enough.
A replacement cost policy has a better chance of completely rebuilding one’s home. However, examine the terms carefully to make sure that it is a true replacement cost policy and one that best meets your needs. A policy cannot be sold as a “guaranteed replacement cost policy” unless the policy will pay to completely rebuild your home.
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C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully obtained significant results, including several million dollar recoveries for consumers against insurance companies and big business. He is a member of the Million Dollar-Advocates Forum—a prestigious group of trial lawyers whose membership is limited to those who have demonstrated exceptional skill, experience and excellence in advocacy. He has been featured in the cover of Los Angeles Daily Journal’s Verdicts and Settlements for his professional accomplishments and recipient of numerous awards from community and media organizations. His litigation practice concentrates in the following areas: serious personal injuries, wrongful death, insurance claims, unfair business practices, wage and hour (overtime) litigation. You can visit his website at www.joesayas law.com or contact his office by telephone at (818) 291-0088.
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