What you Should know about a Home Owners Insurance Policy

There are important things to know when you are buying your homeowners 

insurance like making sure you have replacement value coverage and not 

actual value coverage.  Check out this week’s blog to learn more.

Top Five Things to Know About Your Homeowners Insurance Policy

1. Always purchase “replacement value coverage” and not “actual value” coverage.

2. Always ask you agent about policy “Exclusions” or read the exclusions sections of 

     the policy.

3.  Flood damage is not covered on a standard homeowner’s policy.

4.  There is a cap on the value of certain belongings in most standard policies.

5. Most homeowner’s policies do not cover earthquake damage.

If you’re like most people, when you purchase a home you find an agent or you go online and you buy “homeowners insurance” on the property.  This purchase is usually one of the biggest purchases of people’s live and yet very few people read the homeowners policy or even really know what they’re buying.   Other than the replacement costs or value costs that they put on the “dec page,” most people know nothing about the policy and assume it will cover any and all damage that happens to their home.  This is, unfortunately, not the case.   Homeowners policies can be complex but there are certain things that you need to understand and look for when purchasing homeowners insurance. 

I will try to simplify this so that you know what to look for on your policy. In the photograph above there is what is referred to in the business as a “dec page” which is short for declaration of coverage’s. This is the simplified version telling you how much they will pay for any individual covered loss. However what they do not put on the declarations page are the numerous exceptions and exclusions to payments that they (the insurance company) will make that are contained in the booklet that you will receive in the mail at some point in the future. Some of you may, if you’re an organizer, save this in a file and if you’re not really an organizer, you may toss into the trash. As a note, it is really important to keep those policies for all insurance, whether it is for a car, a home, or renter’s policy.  It is important for you to keep a file of everything that comes in the mail regarding the policy.  Even if you do not review this information at the time you receive the booklets, it is important to keep in the event you need to make a claim.  Below I will list the standard coverages that are contained in most homeowner’s policies and a basic overview. I will also discuss common exclusions. Please note, I will be writing a subsequent blog in a week or two that deals only with exclusions in Homeowners policies and how to protect your family and property.  Finally,  I will talk about coverages that you should opt into and know about that may fit your specific needs that cover things such as operating a business from home or having valuable property such as musical equipment, family jewelry or antiques that will not generally be covered under a standard policy.  These items may have significant value that you will need to add to most policies.  I will begin with those standard coverages that are listed on your “declarations page

Dwelling coverage

To put it simply this is the coverage that covers the physical structure of your home including the walls and roof.  This is the portion of the policy that covers the cost of rebuilding and/or repairing your home in the event that damage occurred from a covered event.   The amount of this coverage is often determined by the carrier.  It is not the market value of your home as the land is not calculated into this amount of coverage.  If your home is older and it would be more costly to restore it with the original features, be sure to discuss this with your agent.  

Personal property coverage

This is coverage that covers the personal items inside your home such as furniture, clothes, appliances, bedding, books and any personal items you have. You usually have several options when it comes to covering personal property and you always need to verify that you cover this property at replacement value and not fair market value. A lot of policies will sell the standard version of actual cash value and this is not what you want. That means that the refrigerator that you purchased in your home that you originally paid $2000.00 for, may now only be worth $400.00.  However, you will still have to buy a replacement refrigerator in the event that your house burns down.  This could be a very costly mistake if the only option you have is actual value for all the belongings inside your home such as furniture, appliances, and personal items such as clothing etc.  This is an important question to ask or box to check when you are buying insurance. Always make sure you have replacement value coverage.

Liability protection

This actually comes up more than you may imagine and can cost you a significant amount of money if you do not have enough coverage. Liability protection is coverage that will defend you by paying attorney’s fees and damages if someone sues you or files a claim against you after they are hurt on your property.  I highly recommend that you have at least $100,000.00 in coverage for Liability Protection.

Guest medical protection

This is usually an inexpensive coverage and it is well worth the cost. This coverage covers the cost of medical expenses for someone who’s injured on your property. Let’s say, for example, you have kids playing basketball in your front yard and one child goes up for a layup and falls and breaks his arm. For various reasons a claim could be made against you as the child was injured on your property. Many times, having this guest medical protection can satisfy your guest’s medical bills without further litigation 

or claims. 

Exclusions

This is likely the most important section that you should review when you receive your homeowner’s policy.  This is why is it best to go to an agent to buy insurance and review all the exclusions with them.   Every policy has different exclusions, but many have standard exclusions.  You do not want to find out about the exclusions at the time you need to make a claim. For example, flood insurance is generally not covered in a standard homeowners policy if the flood originates from somewhere off of your property.  If you live in a flood prone region, you will need to purchase flood insurance separately.  In addition, people are often surprised to learn most policies do not cover things like earthquakes, mudslides, mold, landslides, wear and tear, bug infestations, wind or hurricane damage or construction needed to bring your home up to current code. It is imperative that you review the exclusions in the policy you are purchasing. If you live in a place where your home may be prone to a landslide or a hurricane or an earthquake or a flood or any other damaging incident that is specifically excluded in the policy, you would be wise to look into other coverage or inquire if the carrier you are buying from provides that type of insurance for a different expense. 

Additional Coverages or Riders

There are a number of “extra” coverages you can add to most homeowners policies to fit your needs. The following are a few of the most common.

  1. Extra Contents Coverage It is important to know that most of the coverage

s are a flat percentage of the amount of insurance on the home itself. For example: contents coverage is 50% of the insurance on the home itself. If you insure your home for $100,000, the contents coverage will be $50,000. For a minimal extra charge, you can increase the coverage on your contents without increasing the amount of insurance on the home itself.  If you have valuable contents, you will need to raise this coverage.  In addition, if you have particular valuable items, you need to cover them separately because there is usually a flat rate limit for items like jewelry, antiques, furs, musical equipment, art, etc.

2. Replacement Cost Most large insurance companies offer “Guaranteed Replacement Cost Coverage” for an additional premium. If this is not available you should go with a company that offers this coverage.  This coverage should be available for your roof as well with no deduction for depreciation.

3. Personal Property Extensions of coverage Another example regards special limits on certain types of personal property. For example, most policies limit their coverage for the theft of furs or jewelry to $500. The limit for firearms or computers is often $1000. Many other items are also limited to $500 or $1000 since the homeowners program is designed to fit the coverage needs of the average policy holder. It is your responsibility to review the limitations placed on certain types of property and increase the coverage of one area or another by adding a “Scheduled Personal Property Endorsement” to the basic policy.  This is when you want to talk to an agent.

4. Additional Liability You can also purchase additional liability coverage and medical payments coverage for a nominal premium and I highly recommend this coverage.

5. Flood Insurance The most important exclusion is flood, as many people have learned to their detriment. If live in a flood prone area, any property/casualty insurance agent can help you get it. If you live in a flood-prone community, don’t risk going without flood insurance.

6. Earthquake Insurance No standard insurance policy, including the homeowner’s policy, covers catastrophic damage from an earthquake. For an additional charge, insurance companies offer an earthquake endorsement with your homeowner’s policy that will protect you in case your home suffers earthquake damage. In some areas, this coverage is typically inexpensive and should be considered. However, it can be more costly in earthquake prone areas like San Francisco but likely worth the cost to protect your investment.

If you were a loved one has any question about insurance or has been injured in any type of accident please call the offices of TheOneLawyer.com today. We are a boutique law firm providing experienced and personal representation to injured clients.  At the Law Offices of Laura Payne-Hunt, TheOneLawyer.com we provide professional and personal service to each and every one of our clients on various legal matters and have over 15 years of experience in reviewing insurance policies and in Nevada insurance law.   If you have a question regarding any type of personal injury or paying your medical bills from an accident, please don’t hesitate to call the offices of TheOneLawyer.com and speak directly to attorney Laura Marie Payne-Hunt, Esq. a Henderson Injury Attorney for over 15 years.  Laura is recognized as one of Nevada’s Top 100 Lawyers.  She has the experience and knowledge to obtain the maximum settlement you deserve.  Please call our office if you or a loved one is injured.  We can make sure that you receive the care you need and deserve and advise on how to preserve evidence.  

At our office, we are experienced in helping injured victims get the compensation they are entitled to.  Insurance companies never have the best interest of the injured person at the top of their priorities.  They want to pay as little on every claim as possible.  Having worked for an insurance company as an attorney for 9 years before opening my boutique law firm specializing in helping injured people, I have reviewed thousands of auto accident claims and policy provisions.   

At the Henderson and Las Vegas Accident injury law offices of TheOneLaweyer.com, Laura Marie Payne-Hunt and her staff are here to help you and your family in the event that accidents and tragedies occur.  For any of your legal needs, do not hesitate to contact our Henderson and Las Vegas Accident injury offices.  TheOneLawyer.com is a boutique, family owned law firm that specializes in helping injured people and the community of Las Vegas and Henderson Nevada with legal issues involving auto accidents, wrongful deaths, slip and falls, truck accidents, injuries to children, bicycle accidents, dog bites, product liability claims, and all types of injury claims.  Please do not hesitate to call us anytime you have a legal question or you or a loved one has sustained an injury at 702-450-(HUNT) 4868 and text 24/7 at 702-600-0032.