Insurance

Hurricane season is in full swing, and though we have had few storms so far, there’s still plenty of time. Our daily late afternoon thunder showers can also pose a threat to your dwelling and may have you wondering if your Homeowner’s insurance is adequate. There are essentially 8 different types of Homeowner’s insurance.

The Basic policy typically covers 10 incidents - fire or smoke, explosions, lightning, hail and windstorms, theft, vandalism, damage from vehicles, damage from aircraft, riots and civil commotion, and volcanic eruption. Some mortgage companies find this format of insurance insufficient.

The Broad policy covers all the perils in an Basic policy and falling objects, weight of ice, snow, or sleet, freezing of household systems like AC or heating, sudden and accidental tearing apart, cracking, burning, or bulging of pipes and other household systems, the accidental discharge or overflow of water or steam, and sudden and accidental damage from artificially generated electrical current. This type of insurance can cover not only the home’s structure, but your belongings and sometimes even your personal liability as well. Beware! because it is a "named peril" policy, any damage caused by events other than those listed on your policy will generally be excluded from coverage.

The special form policy has a very broad range of coverage with a good affordability. It takes what the Broad form does and goes further. It doesn’t limit coverage to named perils which means the only incidents you are NOT covered for MUST be stated in an exclusion clause. Natural disasters are typically part of the exclusion. Even so, this is one of the most widely used forms. A second type of the special form is called an HOB which offers better coverage for homeowners living in coastal communities and may also cover boats and lawn equipment. There is also a form of insurance in this category that specifically covers mobile homes and older homes, both of which have unique needs that differ from a standard dwelling.

The tenant’s form, also known as renter’s insurance covers personal items and personal liability.  It can also cover living expenses if you are required to live elsewhere while the rental property is undergoing repairs. There is also a condo form that offers the coverage of renter’s insurance and extends to the walls and floor.

A comprehensive form policy is an open-peril policy form that covers more than any other policy type. The policy must specifically exclude perils in writing for them not to be covered. Damage from natural disasters, animals, neglect, rot or corrosion and foundation issues are normally excluded. Some insurance companies may take the best parts of 2 or more types of these policies, and combine them to offer more comprehensive coverage at a better affordability.

It seems like there are an unlimited number of companies offering Homeowner’s insurance with a large array of options and costs. How should you choose and what mistakes can you make? First, be sure your policy is for the right amount.  If your home appreciates above your insurance amount, you my come up with a loss, or if your rebuild or home improvement costs exceed the insured amount, you will have to pay out of pocket. Also, consider if you will be including any valuable objects in the policy coverage like jewelry or firearms. Don’t assume anything! Deductibles are not always fixed – they can change depending on the type of claim. Your region doesn’t guarantee that the policy covers damage due to natural disasters common to he area. The same with common household hazards like mold or sewage issues. Check your policy carefully and get clarification from your agent as needed.

Favourites If you enjoyed this post, please consider sharing it with others.
Visit Cindy Boyd’s Blog
Disclaimer: The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official policy or position of the HRIS.
Advertisement