Do you really needed Homeowners insurance, is it mandatory?
Unlike automobile insurance, homeowners insurance is not required by law. However, while we all have different levels of risk tolerance, it is probably safe to assume that none of us want to risk homelessness for the sake saving a few hundred dollars of premium.
The majority of us have taken out a mortgage to purchase our home. As a result, the question of whether or not we need homeowners insurance has already been answered by our lender. Any lender or bank which has provided you with a Mortgage, will want to protect their asset, therefore as a condition of the loan you will be required to purchase and maintain a homeowners policy on your home.
Ok I need it, but where can I get it and what do I need to do?
The answer is very simple, don’t try and do it on you own by using an on line website which guarantees you a low premium. Contact Twinbrook Insurance at 781-843-7000 or go to our website at www.twinbrook.com. Your home is probably your largest asset. You will want to work with an insurance professional. Twinbrook will assign one of our professional Account Representatives to work with you, they will identify your specific needs and will then find the best company and homeowners product for you.
How long is it going to take?
The process is very quick and easy. Your Account Representative will learn all they can about your home from various information sources, Assessor information, Real Estate listings etc. At this point we should be able to provide you with a premium estimate. In doing the premium estimate we’ll look at ALL of the companies we represent. We current represent over 12 homeowner insurance companies. This allows us the flexibility necessary to provide you with the “best” product to meet your needs and budget.
Assuming you want to move forward there is some information we will not be able to obtain from our sources. We will work with you to complete a homeowner’s insurance application. Once we have all of the information and the appropriate down payment (typically 10-20%), we will bind (secure) the coverage providing you or your lender with Evidence of Insurance and mail the application with the down payment to the company. It normally takes a couple weeks for the actual policy to get mailed to you from the company.
What did I just buy anyway?
A Homeowners insurance policy is a legal contract. You are required to pay the appropriate premium, in turn the company promises to pay you for covered losses which occur during the policy period, usually one year.
Since everyone’s needs are different, Homeowners polices may be different. However, your basic Homeowners policy contains the following parts;
It is usually the first page and contains summary information regarding the insured, coverage’s, cost and the insurance company assuming the risk.
The Definitions section:
Explains the meaning of terms used in the policy.
The Coverage Section:
Explains the extent in which you’re protected under both your property and liability coverage’s. Property coverage is for a loss to your own property or contents while liability coverage protects you against either property damage or bodily injury you may have caused others.
Details what is not covered by the policy. This may be one of the most important parts of the homeowner’s policy and it is your best interest to know what is not covered.
This section explains the responsibilities of both you and the insurance company under the policy. Pay close attention to the duties and responsibilities you have in the event of a loss.
Changes to the basic homeowner’s policy which add, remove or change standard coverage’s with in the policy. Once again, our Account Executive will use various endorsements to make the basic homeowner’s policy fit your specific needs.
So what is covered?
So what is covered?
Each homeowner’s policy covers you against a specific number of perils (events that cause damage to property). The most common perils include Fire, Windstorm and Theft.
1. Damage to real property:
Pays for damage to the structure (dwelling) identified in the Homeowners policy. The coverage limits will cover the cost of repairing or replacing the dwelling. Other structures not attached to the dwelling are also covered such as sheds, barns or detached garages. The “Other Structures” coverage limit is typically 10% of your dwelling coverage.
In addition, the personal belongings owned by you or by family members who live with you are covered. This coverage extends even to you and your family when traveling or living temporarily away from home, i.e. student living away at college. While the personal property coverage limit is normally 50% of dwelling, there may be additional limitations on specific personal items such as fine art and jewelry, which may need to be scheduled separately.
You should understand the difference between Actual Cash Value versus Replace Cost Coverage’.
Actual Cash Value is the amount of money it would cost to repair or replace the contents of your home AFTER depreciation (wear and tear). Most basic policies cover contents at ACV however you can add an endorsement, which changes it to replacement cost.
Replacement Cost is the amount of money it would take to replace, repair or rebuild your contents or dwelling at today’s prices.
Most homeowner’s policies require you to insure your dwelling up to at least 80% of replacement cost. Therefore, it is critical that correct information is placed on the application and that the coverage limits keep up with inflation. Failure to maintain adequate coverage limits will result in a reduction in claim payments, including any claim for a partial loss. This is why is it important to work with an agency like Twinbrook who reviews your policy annually.
It is important that if you make any significant change (improvements) to your home, you should communicate the changes to Twinbrook, who can determine whether or not the changes have an impact on your total replacement cost..
2. Loss of Use:
The property damage caused by a covered loss may require you to obtain alternative living arrangements. Your homeowner’s policy will cover the cost (motels, meals etc) BUT there may be limitations as to the duration of coverage. The coverage limit is typically 20% of your dwelling amount.
3. Personal Liability:
Protects you against a claim or lawsuit alleging bodily injury or property damage as a result of your (including family members who live with you) negligence. Auto and business related lawsuits are not included. You will want to make sure the coverage limit with in the policy is adequate. Twinbrook suggest a minimum coverage limit of $500,000.
4. Medical Payments:
Pays for medical expenses for persons (not living with you) who are accidently injured on your property, regardless of fault. Twinbrook recommends you maintain a coverage limit of $5,000.
I guess we have covered the basics, is there anything else I should know about coverage’s?
Yes, as we have indicated we all have different needs but in addition to the basic coverage’s, there are some endorsements in which may be beneficial.
This will provide for additional dwelling coverage beyond the amount shown on the declarations page. Typically, it is limited to 25-50% of dwelling coverage. The increase in premium is minor.
It provides for Replacement Cost on all contents. You will definitely want to make sure you have this coverage included in your policy.
Ordinance or Law:
It will provide you with additional coverage from any ordinance or law which may have changed during the policy and it may adversely affect you home. A common example, when replacing a loss there may be changes in building codes which were not in effect when the property was built or remodeled.
This coverage will automatically increase the dwelling limit in order to stay in line with inflation. Failure to have this protection in place will result over time in your home becoming under insured, which may have an adverse impact on any claims settlement.
Scheduled Personal Property:
This is additional coverage which will provide coverage above the personal property limits in your basic homeowner’s policy. It will cover personal possessions such as jewelry, furs antiques, fine arts etc. This is very important coverage if you have a large amount of jewelry. The premium will depend upon the items scheduled and their current value.
The above are only several of the many endorsements which may be made to your policy to enhance your coverage. Your Account Representative will work with you to identify your needs and will suggest endorsements which will cover your needs.