Which Homeowners Policy is Right For Me?

Now that you own a home, you should consider the best way to insure it. One strategy you may consider is to match your needs to the right company. Some companies like new, high-valued homes while some companies do well with older or historic preservation homes. Others are comfortable with country homes or old farm homes. It pays to shop around, both for the best coverage and for a company that likes your type of home.

There are two common levels of coverage that you may consider:

Named causes of loss coverage - The policy only covers for certain kinds of causes of loss to your property. You must prove to the company that one of the covered causes damaged your property.

Risks of physical loss – This covers all causes of loss except those that are excluded. The company must prove that one of the excluded causes of loss damaged your building.

Many companies offer risks of physical loss coverage for your buildings and named causes of loss coverage for your personal belongings. Risks of physical loss coverage cost more, but here are some claims that would not be covered under named causes of loss policies:

If, for various reasons, you don't need a lot of bells and whistles on your coverage, ask around for a stripped down policy, sometimes called an HO-8 form. It MAY be appropriate for very low value, older homes. Coverage features include:

• Protection against a list of specified causes of loss (if the damage isn't created by one of the listed items, such as fire or wind, it isn't covered)
• Designed for older homes. Older homes generally were built with more expensive and/or exotic materials. You could not build early 20th century homes today for any price.
• Contains no coinsurance penalty. You and the company agree on a maximum coverage limit that applies if the building is totally destroyed.

You may want to discuss other types of homeowners coverage if you own a different type of residence such as a modular home, mobilehome, apartment, townhome, condominium or you have personal living space in a commercial building.

Basic Homeowners coverages common to all homeowners form that insure both the home and personal property usually takes care of:

• Coverage for your building (ask about coinsurance and replacement cost issues).
• Coverage for your outbuildings - garages, sheds, barns, cabanas
• Coverage for personal property is usually 50-75% of your building limit Limitations - many policies have special limits on certain types of property, such as theft loss to Jewelry and gems ($1,000), Furs ($1,000), Gold, silverware, pewterware ($2,500), Guns ($2,000), Building supplies - no coverage for theft. Further, very little coverage may be available of other types of property, regardless of the cause of loss, such as, money, stamps, fine arts, antiques, electronics, boating equipment, etc.

• Additional living expense - pays the extra cost of temporary housing, food and other increased costs of living when you are forced from your home by a covered cause of loss.
• Liability coverages - should you accidentally injure other people or damage their property
• Defense costs - includes hiring and paying for a lawyer (if necessary) and paying most court costs.
• Medical payments coverage is for minor injuries to people other than residents of the household. You don't have to be sued or be negligent.

If this short article has raised more questions about your coverage…good. Find an insurance professional to get the answers (and the coverages) you need.

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