Important Homeowners Insurance Questions and Answers

What Is Homeowners Insurance?

Homeowners insurance is a combination insurance policy that offers coverage on the building(s), the contents and liability for injuries that may occur to a third party.

How does homeowners insurance work?

Typically, when a home is purchased, the lender requires the buyer to purchase homeowners insurance. This protects the lender if the home is destroyed before the mortgage is paid off. In the event of a total loss, the lender will be paid first. Any remaining balance will go to the homeowner. However, a property without a mortgage still needs to be covered.

What does homeowners insurance cover?

Homeowners can choose between several standardized policies. A basic policy covers damage from 11 specific perils:

  • Fire
  • Smoke damage
  • Windstorms
  • Vandalism
  • Theft
  • Damage from vehicles or aircraft
  • Explosion
  • Riot or civil commotion
  • Glass breakage
  • Volcano eruption
  • Personal Liability

A basic policy does not cover disasters such as floods or earthquakes, or anything that does not fall into one of the above categories. Most homeowners opt for a comprehensive policy called “All Risk” coverage. This type of policy covers all perils unless specifically excluded. Hurricane coverage may require an additional deductible.

Each policy specifies what is covered and the maximum amounts that will be paid for losses. Typically, the main dwelling section has a coinsurance clause stating that if it is insured for at least 80% of its actual value, coverage will be adjusted to replacement cost, up to the policy limits.

Other structures on the property, such as a detached garage or shed are usually covered at approximately 10% to 20% of the value of the dwelling.

Personal property coverage is normally limited to 50% of the dwelling coverage, with specific limits for money, jewelry and other collectibles. If the homeowner has additional valuables, he may wish to protect them by adding a rider to the policy.

Another section of the policy states the limits for loss of use expenses. This coverage pays rental expenses if the dwelling becomes uninhabitable.

Additional coverage such as repairs, debris removal or damage to landscaping may also be specified in the policy.

A section will be devoted to specifying the exclusions of the policy. Typical exclusions are earth movement, water damage, war, nuclear hazard, neglect, intentional loss, power failure and concurrent causation.

It is important for a purchaser to be informed and aware of the details contained in his homeowner’s insurance policy. Only in this way can he be confident that his needs will be covered.

Is Homeowners Insurance Worth It?

Homeowners insurance is intended to protect your home and possessions against damage. Homeowners insurance also includes liability protection against accidents that occur in the home or on the property. Basically, home insurance provides peace of mind when disasters strike.

Do I Need Homeowners Insurance?

If you are a homeowner, you need home insurance to protect assets and satisfy mortgage lenders. Mortgage lenders require homeowners to have insurance as long as their name is listed on the policy. The mortgage lenders take a loss if your home is uninsured and destroyed. Sometimes you need homeowners insurance just to rent a dwelling as an increasing number of landlords are requiring tenants to show proof of coverage.

How Much Homeowners Insurance do I Need?

You need enough insurance to cover the full replacement cost of your home. Most insurance companies limit coverage to 50 to 70 percent of the amount of insurance you have on the home. If your home is insured for $100,000, then your coverage for personal possessions may be $50,000 to $70,000. Many insurance companies reduce payout if coverage dips below 80 percent of the cost to replace the home. You should periodically review your coverage and keep an up-to-date home inventory that lists all of your personal belonging and their value.

How Much is Homeowners Insurance per Month?

Homeowners insurance costs about $66 per month, or $791 per year, based on the most recent numbers reported by the National Association of Insurance Commissioners. These figures can be higher or lower depending on your policy. Factors affecting the cost of insurance include the market value of your home, your household inventory and liability coverage, if desired.

Should I Buy Homeowners Insurance?

You should buy homeowners insurance to repair or rebuild your home if it is ever damaged by fire, lightning, wind or other disasters. You should buy homeowners insurance to cover the loss of personal belongings, such as appliances, clothing, and furniture in case of a disaster. Keep in mind most forms of homeowners insurance do not cover “acts of God,” earthquakes or floods; you need separate riders for that kind of protection.

Still, the average homeowner will run into countless scenarios when having homeowners insurance becomes a necessity:

  • Hazard protection against fire, hail, wind and other perils
  • Liability protection against accidental falls on the property
  • Personal property protection against theft or vandalism

Umbrella Insurance; What It Is and Covers

With all types of insurances available today, it can be quite confusing. Policies are sometimes difficult to understand. What is umbrella insurance? Umbrella insurance is a safety net. Umbrella insurance refers to a liability insurance policy that protects your assets and future income of a policyholder above and beyond the regular limits of their primary policies. When all other policies are totally exhausted, umbrella insurance is able to jump in and fill in the gaps. It is old increments of one million dollars, and usually costs $ 250.00 a year and up. Its major function is to protect the insured from liability in a lawsuit.

It provides additional liability coverage above the limits of auto, homeowners, boat and personal insurance. It can also include, but is not limited to slander, false arrest, libel and invasion of privacy.

Bodily injury liability covers the cost of damages to another persons body, which basically covers liability claims and the cost of medical bills as a result of: Injuries to other parties due to a serious accident when you are at fault. Harm caused to others as a result of your dog. Injuries caused by a fall at your home by a guest. Injuries to a neighbors child who falls playing in your yard.

Property damage liability covers the cost of damage to another persons tangible property: Damage to vehicles and other property as the result of an auto accident when you were at fault. Damage claims incurred when your dog or pet chews up and destroys your relatives priceless rug. Accidental damage to school property caused by your child.

In today’s world it is not uncommon to see a lawsuit in a serious accident. Under an auto insurance policy, you may carry 25,000 to 50,000. Lawsuits can run over $ 100,000.00. That is when the umbrella insurance would kick in and cover additional charges.

Recommendations that may help you:

  1. If purchasing umbrella insurance, carry at least the minimum liability limit on your auto and homeowners insurance to avoid costly gaps in your coverage.
  2. Purchase excess uninsured motorist protection along with your umbrella policy, it protects you if you are in an auto accident with a driver who is not insured or is under insured.
  3. Update your umbrella, home, auto and personal insurance policies regularly. If you acquire more assets or update your home, etc., you may need additional coverage.

Umbrella insurance is not just for the rich and famous. Bundling your insurances could save you some money. When shopping for umbrella insurance, consider your assets and consider your risks. If you drive a lot for business you may need the extra coverage. I will give you added protection and peace of mind.

Do I Need Umbrella Insurance?

Lawyers today are just waiting to take you to court and sue you for all you are worth. You may think you are covered under your homeowners or auto policies liability insurance that you already have, but a negligent accident could change all that and literally ruin your life.

What you really need is an umbrella insurance policy that covers catastrophic lawsuits. Umbrella insurance covers a catastrophe beyond any other insurance you may have. For example if you get into a car accident and your liability insurance does not cover all for which you are being sued, or if you have a home or any other assets, you could lose your home, your car, and your future. However, if you are covered with an umbrella insurance policy that would take over and save the day.

With so many lawsuits going on, everyone should have personal liability insurance and that is umbrella insurance. The good news is it is not expensive for what you get, and it adds a layer of protection to your life. Your homeowners, watercraft, and auto insurance policies have limited liability coverage. When a lawsuit happens, and your other liability policies are exhausted, then your umbrella policy would cover the rest, and you can count on that.

If your dog were to bite someone, and they sued you for rehabilitation and other medical expenses, would you have enough liability insurance? You can add millions of dollars in added liability protection with an umbrella policy. Your regular policies cover expenses in normal accidents; however, these days when someone sues you for negligence and you are found at fault, you may be looking at large settlements. Consider, years of lost wages, medical bills and rehabilitation for an injury you caused and most regular insurance policies will not be enough. Everyone should have umbrella insurance.

The good news is umbrella insurance is the layer of protection that will let you rest easy in the event such an accident occurs. It is an inexpensive way to give you the coverage you need and protect your lifestyle and family assets.

How much umbrella insurance you need depends on your assets, but the policies come in a wide range from 1-5 million. The cost of an average one million dollar policy is about $300 a year, but depending on your insurance carrier and other factors, it may be quite a bit less.

For instance if you have a good driving record or your homeowners policy is clear of claims, you can get discounts. Also, if you get your umbrella policy with your homeowners and auto insurance with the same company you can save about 20% a year bringing your cost down to a reasonable $240. The savings and benefit to your peace of mind are invaluable.

Do I Need Cell Phone Insurance and How Much Is It?

Do I Need Cell Phone Insurance?

Cell phone insurance is it a necessity or simply a fashionable item that illustrates that I’m savvy. It really depends on the cell phone you have chosen to use. How valuable is it? Would you want to or could you shell out that much money a second time to buy a new one. Is it for work or play? How quickly do you need access to your contact list? The good thing is much of the information stored on your phone is also in a database which you can access with a new phone and download. So it’s important to weigh certain factors to determine if cell phone insurance would really benefit you.

Do You Need Cell Phone Insurance?

It makes sense to insure a business phone. The premiums may even be a write off. Protect your ability to do your job effectively. If you normally operate in the field away from a desk, you use your cell phone extensively. You probably need to have a new phone to replace your lost or stolen phone immediately. In a case like that, cell phone insurance prevents any extended delay in operating your office. Within 24 hours you can be up and running if anything happened to your phone that is covered by cell phone insurance.

Phones used for personal purposes can be insured if the phone was a gift and you don’t imagine being able to afford the phone on your own. Otherwise, it may be a waste of extra money to buy cell phone insurance. You may already be eyeing the latest new phone release. Why replace your old phone with another of the same brand when you’d prefer to try something new.

How Much Cell Phone Insurance Do You Need?

All cell phone insurance covers the replacement of your insured phone with either the same phone or a comparable phone. Often the phones are new, sometimes refurbished if the insurance company is running low on inventory. There is usually only one policy to choose from with one premium and one deductible. It covers the inability to use your phone due to loss, theft or damage.

How Much is Cell Phone Insurance Per Month?

It ranges from $4.99 to $7.99 per month and higher. The cost depends on the carrier the cell phone company uses. Since it is not the cell phone company that sets the rates and they are a third party, the rates do vary from carrier to carrier. Their level of competitiveness in completely dependent of their willingness to compete for your business.

Should I Buy Cell Phone Insurance?

You should buy cell phone insurance for the following reasons. Your phone is very costly and replacing it would be a financial strain. You cannot afford to be without a cell phone for more than one day. Your desperately need to have access to your contact information. The cost of the insurance is minimal compared to replacing the phone.

Cell phone insurance is a good product if it is purchased for the right reasons. It can save the day by keeping your business going when it would otherwise shut down. It can be a great benefit for many who depend heavily on using cell phones for business and social activities. If you cell phone is your lifeline, you need cell phone insurance.