Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
A home is the largest single purchase that most people make in their lifetime. There are two characteristics that make home ownership difficult. The first is that the ownership of a home creates a situation of responsibility where you become responsible for personal injury and property damage that comes out of home ownership. For example, someone enters you home, slips on a rug and falls. Injuries can be minor or severe. It is quite possible that you could be sued to recover the loss sustained by the person who fell. This is a liability loss.
The second is that you have an enormous amount of your money and the mortgage company’s money invested in the home. It is usually a multiple of your annual income and would represent a great financial loss were the home to be destroyed. Your mortgage company is particularly concerned about losing their collateral and will require “hazard insurance” to protect their interests to the greatest extent possible. The list of things that could happen to damage a residence is lengthy but most of the causes or “perils” are contained in the HO-3 Homeowners policy. There are notable exceptions which should be restated. You are probably not covered for damage caused by earthquake or flood. These coverages are available but in slightly different forms and often with different policies.
Because an individual cannot sustain the personal loss of a law suit or the destruction of their property they turn to an insurance company to pool their risk with hundreds of thousands of other residences. This recognizes the probability of damage and spreads that risk over a large number of residences. The insurance company charges enough to be able to pay those losses when they occur. Your state insurance commissioner is very concerned about the adequacy of the insurance companies admitted in your state.
While there are various types of home insurance policies, I will confine my comments to the most common, the HO-3 Homeowner’s policy. Coverage A in a homeowner’s policy covers your residence. The coverage includes additional items but does not cover land or water. It doesn’t cover trees except as covered in “incidental coverages.”
Coverage B covers related structures on the property. It has the same restrictions as Coverage A and doesn’t cover any business structures, except for a residence on the property that you lease to others. It covers you garage
Coverage C covers the personal property that you either own or are responsible for. This is a very important coverage and contains internal limits on selected classes of property such as money, securities, jewelry, guns and watercraft. Misunderstandings often arise about this coverage and it should be discussed thoroughly with your insurance agent. Modifications of this coverage are relatively inexpensive and an unpaid claim is an expensive way to discover that you weren’t adequately covered.
Coverage D pays the necessary and reasonable increase in living cost you incur when your household meets with an insured loss. The company will try to get you back into your residence as quickly as possible but will make sure that you are able to maintain your normal standard of living during the repairs.
Coverage D also covers the loss of rents you might experience in the event of a covered loss. If you have an apartment on the premises and it is damaged by a covered loss, this section would apply. There are other limits and extensions in this section that require your attention if you are leasing property.
There are number of ancillary coverages including credit cards, trees, fire department charges, debris removal, emergency removal of covered property and grave markers.
There are several pages of definitions and exclusions which should be read. Most confusion arising from a homeowner’s policy come from this part of the policy. Many people think that a homeowner’s policy pays for routine maintenance or deterioration.
Coverage L covers personal liability and provides that the company will pay up to the limits for expense that you are liable for because of bodily injury or property damage that happens on your premises.
Coverage M covers medical payments to others and provides necessary medial expenses if they are incurred on your property and result in bodily injury.
There are several pages of definitions and limitations on liability coverage.
The policy then defines your responsibilities. You must notify the company of a loss, you must cooperate and many other responsibilities.
At the back of the policy are a number of “endorsements” which changes the policy. These apply to specific types of property such as trading cards, animals, a roof and others.
Together the HO-3 Homeowner’s policy is a package of protection that is sufficiently broad to meet the requirements of both lenders and homeowners. Special additional coverages are offered and should be considered. Many of these additional coverages can be included in the basic policy.
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The second is that you have an enormous amount of your money and the mortgage company’s money invested in the home. It is usually a multiple of your annual income and would represent a great financial loss were the home to be destroyed. Your mortgage company is particularly concerned about losing their collateral and will require “hazard insurance” to protect their interests to the greatest extent possible. The list of things that could happen to damage a residence is lengthy but most of the causes or “perils” are contained in the HO-3 Homeowners policy. There are notable exceptions which should be restated. You are probably not covered for damage caused by earthquake or flood. These coverages are available but in slightly different forms and often with different policies.
Because an individual cannot sustain the personal loss of a law suit or the destruction of their property they turn to an insurance company to pool their risk with hundreds of thousands of other residences. This recognizes the probability of damage and spreads that risk over a large number of residences. The insurance company charges enough to be able to pay those losses when they occur. Your state insurance commissioner is very concerned about the adequacy of the insurance companies admitted in your state.
While there are various types of home insurance policies, I will confine my comments to the most common, the HO-3 Homeowner’s policy. Coverage A in a homeowner’s policy covers your residence. The coverage includes additional items but does not cover land or water. It doesn’t cover trees except as covered in “incidental coverages.”
Coverage B covers related structures on the property. It has the same restrictions as Coverage A and doesn’t cover any business structures, except for a residence on the property that you lease to others. It covers you garage
Coverage C covers the personal property that you either own or are responsible for. This is a very important coverage and contains internal limits on selected classes of property such as money, securities, jewelry, guns and watercraft. Misunderstandings often arise about this coverage and it should be discussed thoroughly with your insurance agent. Modifications of this coverage are relatively inexpensive and an unpaid claim is an expensive way to discover that you weren’t adequately covered.
Coverage D pays the necessary and reasonable increase in living cost you incur when your household meets with an insured loss. The company will try to get you back into your residence as quickly as possible but will make sure that you are able to maintain your normal standard of living during the repairs.
Coverage D also covers the loss of rents you might experience in the event of a covered loss. If you have an apartment on the premises and it is damaged by a covered loss, this section would apply. There are other limits and extensions in this section that require your attention if you are leasing property.
There are number of ancillary coverages including credit cards, trees, fire department charges, debris removal, emergency removal of covered property and grave markers.
There are several pages of definitions and exclusions which should be read. Most confusion arising from a homeowner’s policy come from this part of the policy. Many people think that a homeowner’s policy pays for routine maintenance or deterioration.
Coverage L covers personal liability and provides that the company will pay up to the limits for expense that you are liable for because of bodily injury or property damage that happens on your premises.
Coverage M covers medical payments to others and provides necessary medial expenses if they are incurred on your property and result in bodily injury.
There are several pages of definitions and limitations on liability coverage.
The policy then defines your responsibilities. You must notify the company of a loss, you must cooperate and many other responsibilities.
At the back of the policy are a number of “endorsements” which changes the policy. These apply to specific types of property such as trading cards, animals, a roof and others.
Together the HO-3 Homeowner’s policy is a package of protection that is sufficiently broad to meet the requirements of both lenders and homeowners. Special additional coverages are offered and should be considered. Many of these additional coverages can be included in the basic policy.