The most common homeowners insurance policy in the United States is the Homeowners-2 or the HO-3 policy. For the sake of simplicity let us take up the most common homeowners insurance questions asked about this policy and answer them. The other homeowners policies are variations of this and hence these answers will be helpful for the other policies to some extent.
1. Does the policy cover direct losses due to fire, lightning, wind storms, tornadoes, hail, explosions, smoke, theft and vandalism?
The answer is yes. The HO-3 policy covers all the above perils (disasters). However you must check the dollar limits for each of these perils and find out if you need extra coverage. For areas specifically prone to any perils there may be some restrictions or deductibles. Ask your agent about more homeowners insurance information in this regard.
2. If the house is completely destroyed and the insurance cover is for $200,000 for the structure will it be enough to rebuild the house?
If the cost of rebuilding is less than or equal to $200,000 then the answer is yes. If the cost of rebuilding is say $220,000 the you will be short by $20,000. The HO-3 pays for structural damages on the basis of replacement cost. The purchase cost of the house will include the cost of the land and is usually much higher than the cost of rebuilding it. The insurance needs to cover only the cost of rebuilding. You can find out the cost of rebuilding from your agent or local builders. If you choose not to rebuild then you will be paid the rebuilding cost less depreciation or the actual cash value as it is known.
3. Are jewelry and other valuables covered?
The amount covered in the standard policy is small, about $1000 to $2000 for the theft of jewelry. If you need coverage for more then you have to ask for it. You can even ask for a floater to cover specific expensive paintings, jewelry items or other valuables. The floater will provide higher limits as well as provide coverage against risks not mentioned in the standard policy.
4. Does the policy cover damage due to pipe bursts?
Yes, the HO-3 policy covers damages due to accidental discharge of water form your plumbing system.
5. Does the policy cover damages due to flood?
No. This can be purchased as an additional cover and if you live in a flood prone area then it is advisable to do so. Flood insurance is also provided by the Federal Insurance Administration. You can call your agent as well as the Federal Emergency Management Agency at 1-800-427-4661. Mudslides are also covered by flood policies.
6. Does the policy cover water seepage?
Sometimes there is water seepage from the ground into the basement causing damages. However loss due to water seepage is not covered under the HO-3 policy as it is considered as a maintenance problem. Even it is not payable under a flood policy if it is not due to a flood.
7. Is earthquake damage covered?
No. Earthquake cover can be taken as an additional cover to the homeowners policy. You can find out the details from you agent or company representative. Earthquake cover varies from place to place depending on whether the area is earthquake prone or not.
8. Are the damages to trees and shrubs as well as damage from falling trees covered?
Yes. Trees and shrubs are covered for loss due to theft, fire and vandalism but not for wind damage. The policy also covers damages due to falling trees and the cost of their removal. You can find out about the limits from your agent or the homeowners insurance providers.
9. Is liability for injuries to outsiders within the insured premises covered?
Yes. The policy covers you for any liability as well as legal and medical expenses due to injury to a neighbor or visitor while visiting your premises. The standard amount of coverage is $100,000. However, you must not pay directly. If you receive notice for any such claim it is advisable to contact the insurance company first. Find out the details from the company or your agent. Homeowners insurance coverage for higher amounts is also available.
10. Is personal property covered while traveling?
Yes. The HO-3 policy covers your personal property while you are anywhere in the world. For example if your golf clubs are stolen from your car’s trunk then you will get their current value. It means that if they are old the amount you get will not be adequate to replace them. Replacement cost of personal property can be covered by purchasing a replacement cost endorsement to the policy.
Note: The above facts are meant to give you only a general idea about homeowners insurance. As the specific terms and conditions vary from region to region and from company to company you should check out the policy coverage details with your homeowners insurance agent or home owners insurance company representative. It is advisable to compare homeowners insurance policies of all homeowners insurance companies when you ask for homeowners insurance rate quotes.
