Home Insurance -What does it really cover?
Becoming a homeowner, without a doubt, is not only your biggest financial investment, but it is the biggest investment in your family's future and security. Getting the right insurance coverage does not always mean getting the cheapest policy possible. It is important to look at the price but perhaps more important is to look at what is being covered and the terms of it. Generally, a policy will cover the home structure itself (Dwelling). It can also provide coverage if someone is hurt on your property or because of your negligence (Liability) or a guest falls and hurts themselves (Medical). Perhaps your home suffers a catastrophic event or loss (Peril) and you are unable to remain there and need to rent a temporary stay (Loss of Use), then that can be covered as well. Perhaps you need to replace your personal belongings after a fire, flood or other peril/loss (Personal Property). Perhaps it's not your home but your storage or warehouse or garage that suffers the damage (Separate Structure). Is it covered? What type of peril is covered? Fire? Earthquake? Tornado? Explosion? Vandalism? Mold? What if you have a break in?
These bold items are what typically make up a standard basic homeowner's policy. However, it is important to know that there are different kinds of homeowner's policies and each one may determine the type of perils it will cover. If certain perils aren't covered, you can always add endorsements or riders to the policy to cover any exclusions and assure your policy fits your specific needs.
The rating has much to do with your personal history, age, address, county, zone, size of home, previous claims, age of home, age of roof and other updates and previous coverage and available discounts, if any. Also, remember all claims are susceptible to a deductible. The amount of the selected deductible will also affect the premium.
Types of Perils:
Basic: fire, lightening, explosion, smoke, vandalism, vehicle collision, riot, wind/hail (wind / hail deductible and coverage may be affected if you live on a coastal region)
Broad-Form Perils: All basic plus, burglary, falling objects (ex. Tree limbs...), freezing pipes, accidental water damage, weight of ice/snow, artificially generated electricity.
Special-Form excluded perils: earthquake, flood, power failure, neglect, war, nuclear hazard, intentional acts, mold, ordinance of law. For these, you may be able to obtain endorsements or riders if available.
What kind of policy do I need?
Below is a list of types of policies obtained from Wikipedia. This seems to explain it well. Please contact John for additional information.
HO0 – Dwelling Fire Form-Usually offered through a mortgage company for a quick closing or if you fail to obtain your own.
A form that provides coverage on a home against fire, smoke, windstorm, hail, lightning, explosion, vehicles, and civil unrest. It does not cover the assured's personal property, personal liability, or medical expenses. It is the type of policy a mortgage lender will buy for a borrower if the latter's homeowner policy lapses.
HO1 – Basic Form-Not offered at our agency-Least accepted in Texas and most States
A basic policy form that provides coverage on a home against 11 listed perils; contents are generally included in this type of coverage, but must be explicitly enumerated. The perils include fire or lightning, windstorm or hail, vandalism or malicious mischief, theft, damage from vehicles and aircraft, explosion, riot or civil commotion, glass breakage, smoke, volcanic eruption, and personal liability. Exceptions include floods, earthquakes. Most states no longer offer this type of coverage.
HO2 – Broad Form-Very common policy
A more advanced form that provides coverage on a home against 16 listed perils (including all 11 on the HO1). The coverage is usually a "named perils" policy, which lists the events that would be covered.
HO3 – Special Form- Usually the policy we write at this agency
The typical, most comprehensive form used for single-family homes. The policy provides "all risk" coverage on the home with some perils excluded, such as earthquake and flood. Contents are covered on a named-peril basis. (Note: "all risk" is poorly termed as it is essentially named exclusions (i.e., if it is not specifically excluded, it is covered).)
HO4 – Contents Broad Form]-Renters Policy
The Contents Broad, or Tenants, form is for renters. It covers personal property against the same perils as the contents portion of the HO2 or HO3. An HO4 generally also includes liability coverage for personal injury or property damage inflicted on others.
HO5 – Comprehensive Form-Most expensive, not the most commonly written policy
Covers the same as HO3 plus more. On this policy the contents are covered on an open peril basis, therefore as long as the cause of loss is not specifically excluded in the policy it will be covered for that cause of loss.
HO6 – Unit-Owners Form-Condominums
The form for condominium owners. It insures personal property, walls, floors and ceiling against all of the perils in the Broad Form. The rest of the condo is covered by a separate policy purchased by the association.
Renters Insurance- (HO4)-What does it really cover?
When you are a tenant, the landlord bears the responsibility of insuring the dwelling or building itself but bears no responsibility for the tenants' belongings. This is when you need a Renters Policy, to protect your personal belongings (Personal Property) in case of a loss due to fire, theft, or vandalism.
It also pays for your out of pocket expenses if you are forced to stay out of your home/apartment if it were to be uninhabitable (Loss of use) due to a catastrophic event.
Liability Coverage is also covered under this policy up to selected amount. Most apartment complexes seem to require $100,000 liability. This is what pays out in the event of a claim against you by the complex or even neighbors who suffer a loss due to your negligence. (Ex: You accidentally leave the water running on your tub or sink or have a faulty washer or if you accidentally start a fire with your candles, stove, iron, appliances etc.)
Medical Coverage is included for those times when a lawsuit isn't necessarily the issue but need to provide coverage for a guest in your home. (Ex: A non-resident friend or family member visits and trips over your rug or coffee table and breaks an arm. You have up to that amount of coverage to provide for their medical coverage or ER visit.)
In the State of Texas, the renter's policy is written in favor of the Insured and his/her personal property benefit. Therefore, as owner of the policy, it pays out to the insured only. In some states, a landlord can request to be added as an additional insured. This is not the case in the state of Texas. This is one of the reasons that if you move half way through the policy, you may simply update the address on the policy and continue to use the same policy.
Please download the Home Insurance Application to the right and after you have completed the application email it to us or fill out the quote form at the top of the page.
Texas Commercial Liability Services
615 E Abram St Suite C
Arlington, TX 76010
Available 8:00am - 4:00pm M-F