The American Dream

Homeowner’s insurance is a bit more exciting than auto because it comes with exciting clients! What’s better than purchasing your very first home?! Besides eating fruit on a yacht in St. Tropez. Nonetheless, I find that Homeowner policy owners tend to show more interest in their homeowner’s policies than auto. Let’s consider your coverage.

Some coverages will be listed differently depending on your company but for the most part they all follow these parameters:

Coverage A- Dwelling limit is the maximum limit your insurance company would pay to repair your home in the event of a total loss. Some companies have clauses that add more coverage than the limit stated, you want to double check with your company. This limit is calculated by the information you provide on the application as well as third party reports regarding the property, such as Zillow for example. It is important to note that the Replacement Cost value, the cost to repair your home in the event of a total loss, is different than the Market value, which is what your home would sell for including land.

The following coverages are a percentage of your Dwelling limit.

Coverage B- Other Structures provides coverage for anything on your property but not attached to your home such as a swimming pool or a shed. Coverage B is usually 10% of Coverage A. This limit is automatically provided on most policies and cannot be removed even if you do not have any other structures on your property.

Coverage C- Personal Property limit is the maximum limit your insurance company would pay for all the contents inside your home, such as furniture and clothing. Sometimes companies will allow you to reduce this limit for a cheaper premium. Coverage C is usually 60% of Coverage A.

Coverage D- Loss of Use is the maximum limit your insurance company would pay if you needed to live in a hotel while your home was being repaired for example. It’s the cost to maintain your standard of living while the home is uninhabitable. Coverage D is usually 30% of Coverage A.

All these coverages can be increased if you feel you need more coverage. You can decrease the limits as well, but you want to refrain from going below 80% of the Coverage A- Dwelling limit. If you do not insure your home to at least 80% of the limit stated by your insurance company, you could fall victim to not being fully paid out on claims. You want to double check with your insurance company what their co-insurance clause states. As always make sure you have a reasonable deductible, standard is $500 or $1K for homeowner’s policies. The last thing you want is to put a claim in for your roof and find out you have a $10K deductible!

If you have a condo or townhome the limits above still apply apart from Coverage A- Dwelling limit. There is no coverage A on a condo policy because your HOA, Homeowner Association, is responsible for the outside structure, while you are responsible for the inside structure, everything from the walls within.

A renter’s policy would cover all of your personal belongings such as clothing and furniture as well as provide liability coverage. Often times when you are renting a property the landlord will require you to have liability coverage, so you would purchase a renter’s policy to satisfy this requirement. Renter’s policies are very affordable ranging from $100-$200/year depending on the limits selected.

Hope this blog helps you get familiar with your own homeowner policy and allows you to call your insurance company and ask the right questions. If you’re interested in learning more about your policies schedule a 30-min consultation with your favorite insurance agent!