How to Read Your Home Insurance Policy

It is important that every homeowner understand their homeowner’s insurance policy. However, these policies are often full of jargon, making them difficult to understand. We are here to break down the parts of a homeowner’s policy and make it easy for you to know how you are covered!

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What is Coverage A: Dwelling?

This is the maximum about the insurance company will pay to replace your home in the event of a total loss. This is usually determined by a replacement cost estimator completed by your agent. It is important that you provide accurate information regarding your home to ensure your dwelling amount is correct.  If you have a total loss, once the dwelling amount is exhausted, you may be responsible for paying to fix the remainder of your home.

 

Most carriers offer “Extended Replacement Cost”. This gives you an additional percentage of Coverage A (usually 25% or 50%) over and above the dwelling amount. This is available should the cost to replace your home be more than the limit of Coverage A. This gives you nice protection from the rising cost of rebuilding a home.

What is Coverage B: Other Structures?

 

This is an additional amount (usually a percentage of Coverage A) that will cover replacement of other structures on the property. This can be things like fences, sheds, detached garages, driveways, and swimming pools. The coverage B limit is usually a default amount. Make sure you let your agent know if you have any exceptional structures that might exceed your limit of coverage.

What is Coverage C: Personal Property?

Personal property is all the items inside your home. The easiest way to think about personal property is that it would be everything you would take with you when you move. These things can add up quickly. It is important to consider furniture, appliances, clothing, and everything in between. Some high value items require additional limits or “scheduling” to be covered. If you have expensive jewelry, art, silverware, guns, musical instruments, or antiques, be sure to let your agent know to ensure these items are covered.

 

You also want to ensure that your agent selects “replacement cost” coverage for your personal property. With this selection, you would have the coverage to replace your items, not counting depreciation.

What is Coverage D: Loss of Use?

 

Coverage D pays for expenses incurred when your home is unable to be lived in due to a covered loss. For instance, if your home burned down, coverage D would cover the cost of another place for your family to reside while your home was being repaired. Coverage D does not usually include mortgage payments; however some companies offer this as an additional endorsement. 

What is Coverage E: Personal Liability?

Coverage E is one of your most important coverage amounts. It protects you in the event you are sued. For example, if someone falls and hurts themselves on your property or your dog bites someone. You want your personal liability amount to be as high as you can afford. Unfortunately, you do not have to be a millionaire to be sued like one.

 

Also, look at adding an umbrella policy that serves as excess liability coverage over your homeowners, auto, and any other personal insurance policies. This gives you extra coverage in the event of a large liability claim that may be over your coverage E limit. 

What is Coverage F: Medical Payments to Others?

 

Coverage F serves as additional coverage to help pay for small injuries that happen to guests on your property. This coverage is usually between $1,000 and $5,000 and is simply designed mitigate smaller claims before they turn into lawsuits.  

If you have more questions about your home insurance policy, please give us a call at 615-919-1009 and we are happy to help!

How to Complete a Home Inventory – 3 Easy Steps

One little known tool that makes the claims process easier for home insurance is the use of a home inventory.

A home inventory is a list, group of photos, or video of all the contents in your home. When it comes to a total home loss, a home inventory can make a significant difference in the amount of your claim settlement.

Grab a camera or cell phone and follow these 3 easy steps to completing a complete home inventory…

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1.     Start with the Big Stuff

 

         First, go around your home and take pictures or video of all the large appliances and pieces of furniture in your home. Don’t forget the garage and outside. Make sure you take note of all model and serial numbers. If you have the receipts for these items handy, take pictures of those as well.

2.     Do a Complete Tour

         Go through each room one by one and take pictures or video of EVERYTHING. A few things that often get forgotten are bookshelves, inside drawers, inside cabinets, and closets. Don’t forget garages, attics, and outside. 

3.   Protect the Files

         After you gather all your pictures, you want to make sure those files are easily accessible in the event of a covered claim. Some ideas to keep those files safe are..

o   Upload to your email

o   Upload to cloud storage such as Google Drive

o   Upload to a thumb drive and store somewhere other than your home

 

o   Send to your agent to attach to your file

While a home inventory may take some time, it will make the claims process so much easier and will most likely result in a greater claims settlement.

 

If you have questions about completing a home inventory, please give us a call at 615-919-1009. We would be happy to help!

What Is Not Covered on My Homeowners Insurance? – 5 Optional Coverages You Need to Consider

Homeowners policies are all different, depending on your carrier. Most people assume that if they have a “standard” homeowners policy, they are covered for everything. That is simply not the case.

Many things that you would think would be covered are actually optional coverages that your agent must add manually. If you have an inexperienced agent, when you go to file a claim, you could be on your own, you are “self insured”.

 

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Many things that you would think would be covered are actually optional coverages that your agent must add manually. If you have an inexperienced agent, when you go to file a claim, you could be on your own, you are “self insured”. 

Here are some optional coverages that you want to consider adding to your homeowners policy before you get caught holding the bill.

1.  Sewer and Drain Coverage

One of the messiest disasters you could have happen in your home is to have a water backup caused by the sewer or drainage system. The damage is often in the thousands and coverage is not usually included in a standard homeowners policy. The Civil Engineering Research Foundation states that sewer backups are increasing at an alarming rate of 3 percent annually. A sewer and drain endorsement is inexpensive and can be added to your policy to protect you from these disasters. When the time comes, it is a worthwhile investment.

2.  Limited Matching Coverage 

Most people assume that if you have a covered claim, the repairs will make your home look exactly how it did before the damage was done. However, for many homeowners policies, this may not apply to roof shingles or vinyl/aluminum siding. When repairing a covered claim, the insurance company has no obligation to make sure the repaired portion of your home matches the rest. With a matching coverage endorsement, if your shingles or siding is out of production at the time of the repairs, the insurance company will also replace the undamaged portion to match. This protects the curb appeal and resale value of your home. Not all insurers offer this coverage, but it is worth asking.

3.  Building Ordinance Coverage

We know that if a covered loss should occur, your insurance company will rebuild your home to the way it was before the loss. But what if your home was not up to current building codes before the loss? You could be stuck paying the difference to bring your home up to code if you do not have a building ordinance endorsement. This additional coverage will usually give you an additional percentage of your Dwelling Coverage A in order to bring your home up to code. If you live in an older home, this coverage could save you a lot of money in the event of a claim. 

4.  Flood Insurance

Most people think that if you are not in a flood zone, you don’t need flood insurance. However, 20 percent of all flood insurance claims are in low to moderate risk areas where you are not required to buy flood insurance. Flood can be cause by many sources including storms, overflowing bodies of water, or over-saturated ground. Unless you live on top of a hill (and even then), flood insurance is worth looking into. It is usually inexpensive and give you significantly more protection against major weather events.

5.  Earthquake Coverage

Standard homeowners policies will not cover damage from any sort of earthquake or earth movement. This also includes sinking, rising, shifting, expanding or contracting of earth. We personally had a claim denied due to “shifting earth” due to extreme drought in Nashville many years ago. It resulted in thousands out of pocket to fix foundation issues in our home. In Middle Tennessee, an earthquake endorsement is inexpensive and would protect you in the event any earth movement should occur. 

While there are many more optional coverages to consider, these are my top five to make sure you at least consider when you are shopping for a homeowners policy. While they might cost you a little more today, in the long run, these coverages could save you thousands and some major headaches.

If you have any questions, please feel free to give us a call or email us here. We look forward to helping you!

BONUS TIP: This is something a lot of homeowners, especially first time buyers, don’t know. In order to get a mortgage you need to have a homeowners insurance policy. Most, if not all, lenders require a policy as part of the application process. We want to help you be a strategic homeowner. Here is a comprehensive review of mortgages and what to look out for if you are getting one.

https://www.consumersadvocate.org/mortgage-rates

Disclaimer: Every carrier’s insurance policies are different. Please consult your homeowners policy for specific coverages, exclusions, and limitations.