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Homeowners Insurance Bringing Good Cheer!

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Homeowners Insurance Protecting All Through the Night!

homeowners insurance protecting through the night

If you are a new homeowner and are having trouble ciphering through homeowners insurance, you are not alone! In fact, only about half of people who have homeowners insurance claim to fully understand their own policy.

As with most purchases these days, we suggest doing your own research before you settle on a plan. By looking around the web and comparing plans and rates, you will not only have a better understanding for what is best for you, but you can also adjust expectations for what you want your own policy to cover. By having a full understanding of your homeowners insurance, you will feel satisfied and sure when the time comes to get the coverage you need.

Learning the ABCs of Homeowners Insurance 

To help you understand homeowners insurance and find the policy that is best for you and your family, we have brought the basics to you. 

  • What is homeowners insurance?
    • In short, homeowners insurance is a type of property insurance that covers private residences by offering financial protection in case of certain types of accidents, burglaries or natural disasters that affect your home. Usually this means that these four aspects are covered: 1) structural damage, 2) personal belongings, 3) liability and 4) additional living expenses.

1) …So What is Structural damage?

  • This is one of the key differences between homeowners and renters insurance. Let’s say your condo suffers damage from by burglars or is destroyed by a hurricane, homeowners insurance can cover the costs of repairing, or in some cases even rebuilding it. Your mortgage lender might refer to this as “hazard insurance”, but don’t let that confuse you, this is simply just part of your homeowners policy. We think the best perk of structural damage is that is covers  parts of your home that may not even be physically attached to your home, like maybe your shed or garage. 

2) What does and does not constitute as “personal belongings”?

Personal belongings that are stolen, damaged, or destroyed by an included disaster on your policy may include:

● Clothes

● Furniture

● Appliances

● Computers

● TV and accessories

● Home Decor & Art

● Wine/Spirits

● Sports Equipment

● Toys/Gadgets

● Electronics

●Outdoor Additions (ie, grill, patio furniture, etc.)

Generally speaking, the level of coverage for personal belongings is a percentage of your home’s insured value. For example, if your home is insured up to $200,000, and personal belongings coverage amount is 50% of this, the limit will be $100,000. The actual percentage used varies, however, depending on your policy.

3) What does Liability protection cover?

  • Liability protection covers lawsuits against bodily injury or property damage that you, your family and your pets may cause to someone visiting your home. This type of protection typically covers court costs and any awards you may have to pay in court. Your policy should also include Medical Payments Insurance so that if a visitor is hurt at your place of residence, their medical bills can be paid by your insurance company.  All of this language and protection can be overwhelming, so when you talk with the experts in the insurance business, you are moving in the right direction toward making sure Liability Insurance protects you.

4) Why would I need additional living expenses in my insurance policy?

  • In times of crisis, there will be things you need that you may have not expected. What if your home burnt to the ground? Where would you stay? Under homeowners insurance, your policy would cover the necessary additional living expenses (ALE) when you need to live away from your home. These expenses can include housing, meals, storage fees, etc. And if you rent or do Air BnB for a room or portion of your home, the amount you you would have collected while your home is being repaired will also be covered; win win!

** Note:  If you are wondering about Earthquake and/or Flood Insurance, most knowledgeable and experienced insurance agencies can quote and add those coverages either onto your existing policy or a separate policy.  When you are thinking about different types of crisis protection, one has to consider earthquake, flood or fire as we have seen devastating damage in the California and some have felt the minor earthquake here in the Tennessee, North Carolina and Georgia Tri-State area. 

So what will homeowners insurance NOT cover?
  • Typical wear and tear
  • Damage caused by an earthquake or flood
  • Mold caused by high humidity or preventable water leak

How Much Insurance Should I Consider to Protect My Home?

second home in mountains protected with homeowners insurance
OK. I want homeowners insurance, but how much do I need?
  • There isn’t one right answer. But here are a few things to consider when factoring how much coverage you need:
    • Current construction costs: In the case your home would have to be completely rebuilt from the ground up, you will need to factor: square footage of your home, type of materials used, special features, and style of your home.
    • The value of your personal belongings: To figure out how much coverage you need, conduct a home inventory including:
  • Photos of all your belongings
  • Write down details of your items (make, model, serial numbers, place of purchase and what you paid)
  • Keep receipts and credit card statements

OK. Now I understand what is and isn’t covered in Homeowners insurance policies, but what are the different types of policies?

The different types of policies are known as “forms” and are categorized into the following:

HO-1: Basic policy-The simplest policy; covers 10 specific perils. You may be able to get coverage for belongings inside your home, but it is not offered in many states.  

HO-2: Broad policy- Covers all 10 perils included in an HO-1 policy along with an additional six perils. They usually cover not only the structure of your home, but your personal belongings as well. It may also cover liability protection.

HO-3: Special policy- The most common type of policy; provides financial protection from all perils unless noted.

HO-5: Comprehensive policy-Similar to an HO-3 policy, except it offers greater coverage with your belongings and liability protection. 

HO-8: Older home policy-This policy is created for older homes where the cost to replace the home is higher than its actual cash value.

How much does homeowners insurance cost?

The average annual premium for homeowners insurance in 2015 was $1,173 according to the National Association of Insurance Commissioners (NAIC). However, these costs vary from state to state. For instance, the average premium for a private dwelling in Utah is $673 a year, while in Florida it averages $1,993.

There are myriad factors that affect the overall cost of homeowners insurance:

  1. Location: Areas that are have a high population density tend to have higher real estate and construction costs, this tends to affects the cost of homeowners insurance. 
  2. Odds of catastrophe. Certain areas in the U.S. are more prone to certain types of catastrophe. For instance, the Carolinas, Florida, and Alabama tend to experience hurricanes which can affects insurance costs.
  3. Construction costs. The cost of construction depends on the type of residence, how large it is, building materials, building regulations, climate, etc.
What factors can affect the cost of your premium?

● Age of your home

● Square footage of your home

● Construction type

● Number of inhabitants

● Crime in the neighborhood

● Roof type

● Your claim history

● Your credit score

● If you have a home security system in place

● If you have pets

● Your deductible the total amount you’d like covered 

Tips on purchasing homeowners insurance
  1. Avoid taking out a policy where claims would be settled by the Actual Cash Value of the items damaged or destroyed. Because of depreciation, the money you receive will generally be less than what you would need to replace items that get damaged.
  2. Use a local insurance agency. Time and time again we see people simply choosing the cheapest policy without meeting with an agent. Then once they need to be covered, there is no agent they are familiar with and there is no one to fight for their claim. Experts agree your best bet is go with a local company where agents pick up the phone, know your name and policy well, and work hard for you before you need assistance. 
  3. Don’t make claims; if you already have a policy, try to minimize the amount of claims you make. Because this has the potential to increase your premiums so if the amount you claim for is relatively low, you might end up saving money by holding off making a claim and keeping your premiums low.

Insurance can feel confusing and complicated without a professional’s help. We hope we have helped you understand the ins and outs of homeowners insurance. When you feel it is time to get more help, don’t hesitate to reach out to a licensed professional. The agents at Dickey McCay Insuranceare able to communicate the important details that can seem muddled amongst all of the wording and paperwork. Our goal is for you to make an informed decision regarding your policy, potential rates, and every aspect of coverage across many companies. We can help you meet all your insurance needs in a one-stop shop at Dickey McCay Insurance!

Renter’s Insurance Protects Your Assets

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renters insurance_protect your view

Rental Insurance Protects Against the Unknown

When you first move into a new rental space, the first thing on your to-do list probably isn’t to purchase renters insurance; however, in an era when renters insurance policies costs less than a latte each month, why is it there are still around 70% of renters who do not have insurance? Likely because, as renters, we think it is the homeowners’ responsibility to cover any damages or burglaries that may occur. Here you would be wrong, which is why this month we are exploring the ins and outs of rental insurance.

Before we dive in, let me tell you a story that is close to home, literally. I used to share a duplex with my best friend. Sometimes she would forget to lock her side, and on a Tuesday in October someone walked in, grabbed her laptop, tablet, school bag with her class books in it, ransacked drawers, then took her brand new mountain bike and rode off. When she got home she panicked and called me. As I wasn’t home at the time, I didn’t see or hear anything. After speaking with our landlord, we realized that there was nothing she could do other than file a police report. The next day we both purchased renter insurance, but for her it was a day too late. Since she didn’t have insurance at the time, she was out thousands of dollars.

renters insurance and neighborhood watch areaNow when we meet people moving into a new place, it is always the first thing she asks them: “Do you have renters insurance?” Then she will tell them what she learned that October. As I give you these tips, keep my friend in mind. She trusted her neighbors, but you never know what can happen where you live, and as the old saying goes, it is better to be safe than sorry (and lose thousands of dollars worth of valuable items that insurance would cover).

Let’s start at the beginning…

What is Renters Insurance?

In the most basic terms, renters insurance is a protection service for you and your belongings in your rental space. Along with loss or damage due to theft, fire, and/or vandalism, some types of water losses like when pipes burst and other perils. It can also cover temporary living expenses and certain medical and/or legal fees like if a visitor to your rental home is injured while visiting.

Common Reasons Renter Insurance is Necessary

Like many insurance policies, your coverage will apply to the people in your rental space who are related to you either by blood, marriage or adoption. Unless your roommate falls into this category, he or she should purchase his/her own policy if he/she wants to be covered.

While your landlord like has his own homeowners insurance, this has limited coverage. Most likely, their insurance will cover the structure of your rental space and any furnishings/appliances inside when you moved in. However, in the event of a burglary, a fire or flood, for example, rental insurance is needed to cover your, the renters, personal belongings.protect your rental location with renters insurance

In some cases, your parents may be your landlord. Again, if they have their own insurance policy that is helpful, but if you live with them you have the responsibility of making sure that they have enough coverage for your personal belongings as well as their own. In other words, you will be covered if you are living with their parents as they are family, but make sure that it is enough coverage for all of you.

Some people think that they do not have any personal items that they deem “worth covering,” but remember a few key items that people often lose in cases of fire, flood, burglary, and/or vandalism: cell phone, laptop, expensive gaming equipment, sports equipment, bicycle, etc.

Renters insurance is one of the most affordable types of policies; many of these policies can start from as little as $5 a month!

Think renters insurance is hard to get (or takes a long time)? Think again. In some cases, you can get covered in less time than it just took you to read these myths!

What does Renters Insurance Cover?

Personal Property 

  • Standard policies cover named perils – bad things that may happen to your stuff, ie fire, lightning, windstorm, hail, smoke, vandalism, theft, freezing, damage from aircraft or vehicles, and riots, to name a few.
  • So, if someone breaks in and steals your laptop, you are covered. Just keep in mind that if the stuff in your apartment belongs to your landlord, it isn’t covered under your policy.
  • You can also add extra coverage for valuable items such as fine art, expensive jewelry, watches, electronics, and more.
  • Picture this: You walk into a cafe, put your stuff down at a table to save your spot, and go to the counter to order. When your coffee is ready, you turn to go back to your table and notice your backpack is gone, along with your phone, laptop, and headphones. In your surprise, you accidentally spill your piping hot double espresso on a bystander’s laptop. Here’s the upside: if you have renters insurance, both your stuff and the damage you caused to the bystander’s laptop will be covered, in most cases. Yes, even though you weren’t in your rental space!
  • Exceptions: Floods are not covered. Same goes for other natural disasters.

Temporary Living Expenses

  • Let’s say your oven catches fire and this forces you out of your apartment for a couple of nights. Where will you go? You may need to get a hotel, for example. This is a situation that your renters insurance policy will cover. Some may even cover the extra money you have to spend on food and laundry. Talk about saving the day!

Personal Liability & Medical Bills

    • That’s right, renters insurance coverage extends to legal fees and medical expenses. So if you are sued after a guest at your annual Friendsgiving slips on a spilled drink and breaks her wrist, your policy may cover the costs to get you out of this unfortunate predicament.
    • Or what if the earlier over fire spreads to your neighbor’s apartment and does damage there? They should be covered under your renters insurance policy. If your neighbor is VERYunhappy and decides to take you to court, your coverage will once again work in your favor to cover your legal fees.

What isn’t Covered by Renters Insurance?

  • A place to stay if your rental space becomes infested with bedbugs
  • Natural catastrophes such as floods and earthquakes, or man-made disasters such as terrorism, war, or a nuclear meltdown – these require either a separate policy or additional coverage
  • Rule of thumb: If it’s not a listed peril on your policy, it’s not covered.

How much Rental Insurance Coverage Should You Purchase?

When buying your renters insurance policy, you will need to decide what dollar amount you will want your insurance policy to cover; this is known as your coverage amount. This varies for each person and what they own, and it can also vary for each category (property, living expenses, & medical/legal costs).

For Personal Property, here are four steps that can help you save money:

  1. Take a quick walk around your apartment, and inventory by taking a video of everything you care about
  2. Make a list of your “big ticket items” and tell the video how much money they are worth
  3. Create an estimate for bulk items such as clothes and kitchen items
  4. Add all of this up to determine how much coverage you will need. We suggest rounding up to the nearest $10,000. For instance, if you have $17,000 worth of items, you should choose a personal property coverage amount of $20,000. If your estimate goes up as you make new purchases, you can adjust your coverage as needed.

Not a Homeowner, Protect Yourself with Renters Insurance

With all the information provided and a few examples of people who have been affected by not having renters insurance, I hope you will act today and secure a rental insurance policy or share this article with someone who may need to know more about the value renter insurance provides them and their immediate family.  The cost is minimal compared to value of replacing stolen or damaged goods.

If you need to know more about exactly what you need, amount of coverage, cost, or getting a policy completed, contact a local insurance agency and talk with a trained professional.  Dickey McCay Insurance is available if you don’t have one as they specialize in renters insurance.  Don’t delay, call today!