Go to the cabinet, drawer, or folder and pull
out your home owners insurance.
Go step by step with the coverage explanations on this
page to go over your insurance.
If you dont have insurance yet and are simply still
shopping, the coverage explanations on this page hopefully will
make you feel more confident about choosing your insurance
Below is an example of a possible home owners
outlines what is covered, the dollar limit amount, and the
premium, without showing the actual dollar amounts (The dollar
amounts vary depending on what coverage amount you want and how
much your insurance provider charges for your coverage limit
amount. Also, your monthly premium may be dependent on the
amount of your deductible).
Section I Property Coverages
B Other Structures
C Personal Property
D Loss of Use
Number of Months
Section II Liability Coverages
E Personal Liability (each occurrence)
F Medical Payments (each person)
Full Value on Personal Property
Guaranteed Replacement on Dwelling
Building Ordinance or Law Coverage
For further coverage which is optional, you may
wish to obtain an umbrella policy for one million dollars extra
coverage, for your house, cars, and whatever other assets you
wish to include in this policy.
is a great page for further explanations on insurance
The information from this page is given below:
purposes of this discussion, the following will be based upon
the most common of HomeOwner's policies . . . the Standard
Bureau Form "H/O III" or the "special form"
equivalent there of. As a preface to this discussion, you will
need to understand a few terms (and abreviations) that will be
All Physical Loss (APL):
Property covered on an APL basis means that property is covered
against damage from Any-and-All perils EXCEPT those perils that
are SPECIFICALLY EXCLUDED by the policy (act of war, flood,
public domain, wear and tear, drain backup, earth movement,
nuclear hazard, etc.).
Named Peril (NP):
Property covered on an NP basis means that property is covered
against damage ONLY if the damage is the result of a
specifically named peril (wind, rain, fire, vandalism, falling
Actual Cash Value (ACV):
The maximum potential payment the Insurance Company will make
for damage to covered property is based upon the ACV (or
depreciated value) of the property at the time of loss. Example:
Two years ago you paid $500.00 for an item. That item had a
reasonable life expectancy of ten years. You have already
received two years (or 20%) use of that item when it was
damaged. That item (or a comparable equivalent if that item is
now out of production) currently sells for $500.00 new. Based
upon ACV Coverage, the most you would collect is $400.00
($500.00 less 20% depreciation).
Replacement Cost Value (RCV):
The maximum potential payment the Insurance Company will make
for damage to covered property is based upon the current cost to
replace the property with NEW comparable property (no
depreciation). Example: Two years ago you paid
$500.00 for an item. That item currently sells for $500.00.
Based upon RCV coverage, the most you would collect is $500.00
Declarations Page (Dec Sheet):
This is the single page form that is attached to the actual
policy on which appears policyholder information such as insured
name and address, mortgage company name, address and loan
number, policy number, inception and expiration dates, coverages,
premium charges, endorsement forms, etc.
A separate written form attached to the basic policy that
changes some of the terms, conditions, limitations or exclusions
that appear in the basic policy contract.
Go back to the
Owner's Insurance Policies
Owner's Insurance Policies are "package" policies
providing multiple forms of insurance to protect the Insured
against multiple possible causes of loss. The Home Owner's
Insurance Contract package includes two primary forms of
IN THE PROPERTY SECTION of your Home Owner's Policy is coverage
to protect your property against loss or damage, as well as
coverage to protect your household budget against increased
expenses that could be incidental to the insured property having
sustained a covered loss. Coverage with the "property"
section of your Home Owner's Policy are typically referred to as
Coverage(s) "A", "B", "C", and
"D". These coverage designations breakdown as follows
. . .
insurance covers your main dwelling structure and all permanent
attachments thereto. Coverage "A" is usually All
Physical Loss (APL) and is based upon Replacement Cost Value (RCV).
insurance covers other structures on your same property that are
NOT permanently attached to your dwelling (fence, storage shed,
gazebo, pool, etc.), as well as landscape components (trees,
shrubs, grass, sprinklers, decks, etc.). Coverage "B"
is usually All Physical Loss (APL) and is based upon Replacement
Cost Value (RCV), except trees, shrubs, plants and lawns, which
would be covered on a Named Peril (NP) basis. Coverage
"B" will NOT usually cover separate structures on your
premises that are "intended for use" or are actually
used "in whole or part" for business purposes. If this
presents a potential problem for you, ask your agent to
"endorse" your policy to extend this coverage or
contact one of our Local
This insurance covers your personal property, which can be
loosely defined as "anything you own which is not a
permanent part of your dwelling, out buildings or land (clothes,
furniture, jewelry, paintings, appliances, etc.)". Coverage
"C" is usually Named Peril (NP) and is based upon
Actual Cash Value (ACV). Some insurance companies are now
starting to offer All Physical Loss (APL) and even more are
offering Replacement Cost Value (RCV) on Coverage "C"
of their HomeOwner's policies.
Whether Coverage "C" on your HomeOwner's Policy is
based upon All Physical Loss (APL) or Named Peril (NP), Actual
Cash Value (ACV) or Replacement Cost Value (RCV), most basic
HomeOwner's policies include coverage "limitations"
that apply to certain classes of personal property.
Following are listed some types of personal property and the
typical coverage limits that could apply . . .
property: while away
from premises - $1,000.00
varies greatly (low limits to no limits) - check your policy
(not including electronic data equipment) - $200.00
premises only) - $5,000.00
including furs, precious and semi-precious stones - $1,000.00 to
medals, precious metals - $100.00
securities, stamp collections, tickets - $1,000.00
(not used with watercraft) - $1,000.00
(including equipment, motor and trailer) - $1,000.00
Having adjusted HomeOwner's Claims for many years, it always
bothered me that I was the one who had to explain COVERAGE
LIMITS to the insured after a loss had already occurred. This
should have been explained by the agent (and endorsed if
necessary) when the policy was purchased. The insured was ALWAYS
DISAPPOINTED (to say the least) when they learned about COVERAGE
LIMITS the hard way.
is the insurance that protects your household budget. It is
typically referred to as Additional Living Expense (ALE) or
Loss-of-Use Coverage. In the event you should have a covered
loss that renders your home uninhabitable, you would have to
incur the expense of relocating to a temporary substitite
residence while your home is being repaired. The extra expense
you would incur for this temporary relocation would be
reimbursed to you under this coverage. This would be a
dollar-for-dollar reimbursement and would not be subject to ACV
or RCV conditions.
in the Liability section of your HomeOwner's policy is Liability
and Med-Pay Coverage. Liability insurance pays to others who may
sustain a Bodily Injury while on your property due to some
negligence (an act or failure to act) on your part for which you
may become legally liable. Med-Pay Coverage also pays to others
who may sustain an injury while on your property whether you are
legally liable (at fault) for the injury or not. While Liability
Coverage would pay for medical expenses, lost wages, pain and
suffering, etc, Med-Pay Coverage would simply reimburse the
injured "visitor" for necessary medical expenses
incurred in treatment of their injury.
HomeOwner's policies may EXCLUDE coverage for Liability arising
out of a business or profession. If you are operating a business
or profession out of your home, you need to check with your
agent to verify that your clients would be covered if they were
to sustain an injury while at your home. If your existing
HomeOwner's policy does not provide this protection, have your
agent endorse your policy to cover this potential liability. If
your present insurance company will not provide this coverage .
. . GET ANOTHER INSURANCE COMPANY!
Liability / Med-Pay Coverage limits are $50,000 / $500. However,
if your property has an increased "risk" (such as a
swimming pool), we suggest increasing these limits to at least
$100,000 / $1,000. Check with one of our Local
Experts for other possible recommendations to address your
Go back to the
should now have a basic understanding of HomeOwner Insurance
Policy Coverages. Suggestion: dig out your current
HomeOwner's Insurance policy and review it in light of what you
have learned here. You may have some deficiencies you will want
to address IMMEDIATELY!
Quotes USA recommends calling our Local
Expert for help.
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