Homeowners Insurance Crystal

There are three major types of Homeowners Insurance

HO-2:  Also known as Broad Form or Named Perils Policy
HO-3:  Also known as Special or Comprehensive Perils Policy subject to common exclusions*
HO-6:  Also known as Condominium Unit Owners Policy—mostly written on Broad Form or Named Perils Basis
Coverage on the dwelling should be Replacement Cost instead of Actual Cash Value.  Recommended Endorsements include Water/Sewer Back Up Coverage, Ordinance & Law Coverage, & Guaranteed Replacement Cost Coverage or 50% Additional Replacement Cost Coverage.

How to read your policy - your policy includes a Declarations Page which outlines the limits of your coverages as follows:

Coverage A:  Dwelling should list the dollar amount—cost to reconstruct the dwelling.  This cost is not based on market value & is subject to yearly increases.  Any major repairs or additions must be reported to keep the Replacement Cost provision & not be subject to a co-insurance penalty
Coverage B:  Other Structures—Garage, Shed or Gazebo—any structure not attached to the dwelling
Coverage C:  Personal Property—Furniture, Clothes, Small Appliances, Electronics, etc.  Purchase replacement cost coverage endorsement.  If you don’t purchase the endorsement, you will only receive payment on an “Actual Cash Value Basis”.
Coverage D:  Additional Living Expenses or Loss of Use—pays for the additional cost for temporary living accommodations, meals or laundry after a covered loss
Coverage E:  Personal Liability—pays for claims where you are found to be legally liable, i.e. negligent in causing injury to a third party such as if your dog bites a neighbor, host liquor, etc.
Coverage F:  Guest Medical Payments—pays medical expenses to a third party even if you are not considered legally liable for their injuries
Coverage G:  Valuable Items—optional endorsement which provides coverage for valuable items such as jewelry, furs, guns, cameras, antiques, fine arts/china/crystal, computers, etc.   Written on a blanket or scheduled basis depending on the company.   Usually no deductible for these items & you will probably need to provide a bill of sale or appraisal for items over $1,000.
WARNING:  If you operate a business from your home at a minimum you will need to disclose this to your agent/company and depending on the type of business they will recommend the purchase of an endorsement or they may require that you purchase a separate policy (it is not optional if you will be operating the business from your garage) or they may decline to write a homeowners policy entirely.  The main caveat here is that you need to disclose this information to avoid the possibility of a claim being denied or worse that your policy gets rescinded.

We recommend purchasing a disability policy to pay your mortgage in case you are disabled &/or term life insurance to provide your family enough to pay off the mortgage in case of your premature death.  

*Common Exclusions – floods, earthquake/ mudslides, sinkholes, vermin, obsolescence or war.  

**Note this outline is for information only & is not an insurance policy.  Only your policy will contain specific details of coverages, conditions & exclusions.  All coverages are not available in all states.  For additional information contact your agent for professional advice tailored to your specific needs.

HOMEOWNER'S INSURANCE SAVINGS TIPS

• Credit – Keep your credit in tip-top shape – in Virginia & the District of Columbia insurance companies are allowed to pull an insurance score (this is a “soft” pull on your credit which does not reduce your score) as an underwriting tool that they can use to determine your pricing tier.  Bottom line the better your score – the lower your rate and conversely if your score is impaired you will be subject to higher premiums or might not be able to purchase homeowners insurance through the traditional marketplace
  
• Advance quote discounts – most companies will offer up to a 5% discount for quoting your policy at least ten days before your closing date so it pays to shop for insurance early
  
• Account Credit/Multiple Policy Discounts – the majority of companies will give you an additional 10 to 20% discount on each policy if you bundle both auto and home with them.  The reason companies give you this discount is that they have studies that show that the more policies you have with a company the longer they will keep you on the books thereby making your account more profitable in the long term
  
• Life Discounts – many companies offer life insurance and if you purchase a small policy with them will give you a 5% discount on both auto and home policies.  The reasoning is the same as above.  So consider purchasing this as the rate savings will usually be much higher than anything you will be offered through the bank or other companies that will be bombarding you with offers
  
• Alarm Credits – discounts for Central Station Burglar & Fire Alarms up to 20%
  Other Security Credits – fire extinguishers, smoke alarms, deadbolts up to 2% for each
  
• New Home Credit – discount up to 20% depending on year of construction (i.e. less than 15 yrs)
  
• Sprinkler System Credit – 5 to 10%
  
• Green Discounts – some companies will provide up to a 5% discount for homes built using “green” materials
  
• Senior Citizen – some companies will offer discounts for retirees or seniors
  
• High Deductible Credits – for Homeowners Insurance consider at least a $1,000 deductible.  Higher deductibles are usually not worth the savings unless you have a home insured for more than $750,000 to $1,000,000

Make a concerted effort to maintain your home to avoid unnecessary claims and thereby avoid surcharges to your policy or the possibility of losing your coverage.  Catastrophe (also known as CAT) Claims are not counted against the policyholder, i.e. no surcharge or cancellation can be done for a CAT Claim.  CAT claims are designated by the industry and an event is currently designated as such if it has caused $25 million or more in property damages and a significant number of policyholders and insurance companies are affected.  Other than CAT losses most companies will cancel your insurance for 2 or more claims or one very large claim in a 3 or 5-year period depending on the underwriting regulations in the jurisdiction where the property is located.  If you are canceled, make sure to be diligent about securing replacement coverage which might be hard to find but is doable.  Do not let the bank put forced-place coverage on your home as these types of policies are usually limited to coverage for the structure only and only up to the loan amount – which usually leaves out coverage for your personal property or personal liability.  One consideration for obtaining a policy may be the FAIR Plan in your jurisdiction. FAIR plans are quasi-government organizations set up to provide coverage for those property owners that cannot obtain coverage in the standard marketplace.   In DC it is called DC Property Insurance Facility; in Maryland, it is the Maryland Joint Insurance Association and in Virginia the Virginia Property Insurance Association – as licensed Agents we can help you to obtain this coverage.

**Note this outline is for information only & is not an insurance policy.  Only your policy will contain specific details of coverages, conditions & exclusions.  All discounts are not available in all states.  For additional information contact your agent for professional advice tailored to your specific needs.