HOMEOWNER COVERAGE OUTLINE

The homeowner policy provides protection against the financial consequence of personal losses. A homeowner policy is a combination of property and liability coverage. The homeowner policy is tailored to meet the needs of a homeowner. The following is a basic outline of the homeowners (HO-3) policy and the endorsements most widely used in the (HO-3) policy.

The (HO-3) policy provides coverage for one or two family dwellings that are owner occupied. The HO-3 policy provides coverage against risks of direct physical loss to real property, except for those causes of loss specifically excluded. Personal property is covered against direct physical loss caused by a specified peril.

SECTION I COVERAGE - Real Property

COVERAGE (A) DWELLING

This amount of insurance applies to the dwelling and attached structures. The limit of insurance for the dwelling is based on the value of the home.

COVERAGE (B) OTHER STRUCTURES

This coverage limit applies to detached structures such as garage or storage shed. The limit of coverage is set a 10% of the dwelling. The insured can purchase a higher limit.

COVERAGE (C) PERSONAL PROPERTY

Coverage C provides worldwide coverage for personal property of the insured. Special limits apply to some types of property, and some property is excluded from coverage. The overall limit for coverage C is 50% of the dwelling limit. Coverage C can be modified in several ways with endorsements.

COVERAGE (D) LOSS OF USE

This coverage applies in the event of a loss under coverage A. If the insured temporarily loses use of the dwelling this coverage would apply. Payment would be made for expenses incurred to live elsewhere following a loss that makes the home unsuitable for living. Another method for determining payment for loss of use is fair rental value, which is the amount of rent that could be reasonably charged for the premises, less any expenses that do not continue while the premises are unsuitable for living.

SECTION II - Liability Coverage for Personal Loss Exposures

COVERAGE (E) PERSONAL LIABILITY

The insuring agreement under Coverage E provides liability coverage if a claim is made or suit is brought against an insured because of bodily injury or property damage. Coverage is provided for residence premise. Liability coverage is provided for the named insured and members of the insured household who are relatives. Personal liability has a basic limit of $100,000 per occurrence, which may be increased for an additional premium. In addition to the basic limit, Coverage E also provides additional coverage for expenses such as defense cost, expenses incurred providing first aid to others and damage to property of others. The additional coverage provided under section E is subject to limitations and certain conditions.

COVERAGE (F) MEDICAL PAYMENTS

This coverage will pay the necessary medical expenses for bodily injury of others. Coverage applies to accidents that occur on the insured's premise or any other location when caused by an action of the insured. The coverage has a basic limit of $1,000 per person. The insured may select higher limits.

ENDORSEMENTS

SCHEDULED PERSONAL PROPERTY

The scheduled personal property endorsement is used to provide coverage for risk of direct loss for such items as jewelry, furs, cameras, musical instruments, silverware, golfers equipment, fine arts, postage stamps and rare coins. Scheduled property can be insured for any amount the insured requires.

DWELLING REPLACEMENT COST

PERSONAL PROPERTY REPLACEMENT COST

Property loss settlements under the homeowner policy are made on an actual cash value basis. When the replacement cost endorsement is added the loss settlement payment would be sufficient to replace the item for the cost at the time of loss without deductions for depreciation.

Please note there are limitations for Dwelling Replacement Cost coverage such as the age of the house, which varies from company to company, as well as the house has to be insured to 100% of its replacement cost value.

IN HOME BUSINESS

Many people have an office in their homes, some as just additional workspace away from the office others as their primary work location. The unendorsed homeowners policy provides only $2,500 for equipment used for business on your property and $500 off. If your computer has a couple of work related programs on it, then it would be subject to this limit. If you have clients come to your home, a lawsuit due to injury might not be covered. Talk to us to find out what endorsements we can put on the policy to avoid these coverage gaps.

UMBRELLA/EXCESS LIABILITY

Your homeowner/Condo/Tenant policy provides liability coverage, typically between $300,000 and $500,000. Your Auto policy also has liability coverage of various levels. If you are sued for a loss occurring on your property or an auto accident where you injured someone, there is a good chance these limits will not be enough to cover the settlement the judge or jury orders you to pay. You are then required to pay these amounts from your savings, by selling your house and other property or by having up to 20 years of future earnings earmarked for that payment.

An Umbrella or Excess Liability policy provides a $1,000,000 of coverage for Bodily Injury and Property Damage over the amount provided by your primary policies. If you own a vacation home, dog, swimming pool, boat, waterfront property or have assets you want to protect, you definitely should consider having this coverage. Costs vary depending on the limits of your auto and how many autos you insure, you and other household members driving records or the size of your boat. We would be happy to give you a quote. To activate a policy, a signed application is needed. Depending on the company that writes your homeowner policy, this coverage could be on the policy as an endorsement or written as a separate policy.

EARTHQUAKE

Earthquake and Flood are always excluded coverage on a homeowner/condominium or tenant policy. Earthquake coverage can be added as an endorsement. The coverage will have a 5% deductible applied separately to both the dwelling and contents portion of your policy. Coverage for a brick or partial brick unit would be costlier as the damage caused by an earthquake would be more extensive. Earthquake coverage will not cover damage directly or indirectly caused by a flood due to an earthquake.