Your home is likely the most significant investment you’ll make in your lifetime, and you can’t underestimate the importance of dependable home insurance. When you start shopping for a policy, the multitude of options can feel confusing or downright overwhelming. You might have many questions, which will affect the policy you choose and how you feel about it. These top 50 most common home insurance questions and their answers should help your search get started.
1. Do I Truly Need Homeowners Insurance?
While you technically do not need to carry homeowners insurance on a home you own outright, almost all mortgage lenders require an active policy before approving a loan.
2. What Does Homeowners Insurance Cover?
Your individual policy will vary from other homeowners’, but most policies cover damage due to:
- Fire or lightning
- Smoke
- Windstorms or hail
- Explosions
- Aircraft
- Theft
- Vandalism
- Vehicles
- Freezing of household systems
Your policy should cover damage and liability. Better policies cover the additional living expenses you will incur if your home is unlivable due to a covered occurrence.
3. What Does My Homeowners Policy Exclude?
There are a variety of common exclusions that homeowners insurance policies don’t cover, including:
- Earthquakes
- Flooding
- Power failure
- Nuclear explosion
- Neglect
- Ordinance of law
- Intentional damage
Some of these, such as earthquakes and flooding, can be covered by additions to your policy. Others, like neglect or nuclear explosion, cannot get coverage.
4. Are Items on My Property Covered in My Homeowners Policy?
Yes. Homeowners policies cover your property, structures on it and your personal property. That means your policy will cover everything from the backyard shed to the kitchen sink, and all the personal belongings in between.
5. How Much Money Will I Receive When My Personal Property Is Damaged?
Again, this depends on your particular policy. Within the policy, you’ll find a list of specific monetary limits that dictate how much you will receive for items in particular categories. For instance, there may be a limit of a $2,000 payout for the theft of firearms. But if you have a collector’s edition or heirloom firearm, you may want to talk to your agent about adding additional, specific coverage for that item.
6. How is the Value of Damaged Personal Property Determined?
This is how much it costs to replace an item, minus depreciation. Your refrigerator may have cost $2,000 when you first bought it, but then depreciated by 50% before it was damaged. You would be paid $1,000 for it based on actual cash value.
7. What Is Replacement Coverage?
If your policy offers replacement coverage, it means you will receive the cost of replacing the item without considering depreciation. However, these policies limit your payout to a maximum dollar amount. Replacement coverage costs more but goes a long way toward rebuilding your home.
8. What Is Extended Replacement Cost?
An extended replacement cost policy will pay up to a specified percentage over your policy limit to completely replace a badly damaged home. The percentage often ranges from 20 to 25%.
9. Is My Personal Property Covered Even When I’m on Vacation?
Yes. Personal and liability coverage work to cover you while on vacation. If you’re on the opposite side of the world and a covered damage occurs, your insurance policy should cover the damage or loss. Speak with your insurance agent before traveling to best understand what is and isn’t covered.
10. Does My Liability Coverage Extend Beyond My Home?
Yes. If you are at fault for an injury or loss to someone else, your policy should cover you whether it’s a slip-and-fall in Italy or injury by falling object in Indiana.
11. What Should My Liability Limits Be?
The minimum for a liability policy starts at $100,000, but this is not an area you want to skimp on coverage. In the event of litigation, a policy of between $300,000 and $500,000 is recommended to protect your assets.
12. I Work From Home. Does My Homeowners Policy Cover My Business Equipment?
To some extent — a homeowners policy considers your home office equipment to be personal property used for business purposes.
13. How Much Will Homeowners Insurance Help My Home-Based Business?
You can receive a payout for the damage to pieces of equipment like laptops and printers, but to receive payment for the losses in revenue you will need a business policy that includes business interruption insurance.
14. How Much Does Home Insurance Cost?
According to the Insurance Information Institute (III), the average homeowners insurance premium is just under $1,200.
15. What Home Features Affect Home Insurance Premiums?
The age of your home, its wiring and its construction materials all factor into your premium.
16. Does My Roof Affect My Premium?
Yes. The older the roof, the more likely it will experience problems, and the more you’ll pay.
17. Does My Garage Affect My Premium?
Yes. Attached garages are covered, while detached garages may cost more to insure.
18. Do Newer Homes Cost Less to Insure?
In many cases, yes. Construction methods and materials have improved over the years, lowering the risk insurance companies take on.
19. How Does Location Factor Into My Premium?
Some states have significantly higher premiums than others. According to the III, Oregon has the lowest premiums at around $650, and Florida has the highest at nearly $2,000.
20. Does My Neighborhood Impact My Premium?
Yes. If your neighborhood is known for extreme weather or high rates of vandalism, your rate will go up. Living near a fire station, on the other hand, can help lower it.
21. Do My Outdoor Amenities Affect My Insurance Premium?
Sometimes. If you have a swimming pool, playground equipment, a trampoline or other structures that could cause injury, you may have to pay more.
22. Are There Any Personal Factors That Impact My Insurance Premiums?
There are some. What you do in your home can raise your rates. If you are a smoker, for example, or participate in hobbies like dog breeding, you may have to pay more for your policy.
23. How Does My Credit Score Affect My Policy Cost?
Your credit history can lower your premium if it is good, or increase your premium if it is under a certain threshold determined by individual companies.
24. Do Prior Claims Affect My Premium?
In many cases, yes. Your insurance company may choose to charge you a higher premium if you have one or more claims in your history.
25. Can Home Improvements Lower My Premium?
In some cases. If the improvements bring an old building up to code or add value to your home, you may see savings on your premium.
26. Are Protective Measures a Good Way to Lower My Premium?
Yes. Making safety upgrades such as installing an alarm system or upgrading your deadbolts is a good way to lower the risk you present to the insurance company.
27. Should I Insure My Home to Market Value?
No. Your home should be insured for the full amount it would take to rebuild your house if it were damaged beyond repair.
28. What Determines the Cost of Rebuilding My Home?
Factors include:
- Square footage
- Number of rooms
- Type of roof
- Attached garages
- Fireplaces
- Type of exterior wall construction
Take all of these into account when estimating your home’s rebuilding cost and therefore the amount of insurance you should carry.
29. What Happens to My Policy If I Make Home Improvements?
If you make improvements or additions to your home, you should contact your agent and ask about increasing the limits of your policy to make sure you are adequately covered.
30. What Is the Minimum Amount of Insurance I Can Buy?
In most cases, your lender will require that you have enough insurance to cover at least the amount of your mortgage.
31. What Happens If I Only Carry the Minimum Required Insurance?
If you choose the minimum amount, you ignore the cost of rebuilding your home. Going with the lender-required minimum means your policy will only cover the amount of your mortgage, and you will be stuck paying thousands out of pocket for repairs or rebuilding.
32. What Is a Home Inventory?
This is the process of taking stock of everything in your home and documenting it for yourself and your insurance company.
33. Why Should I Complete a Home Inventory?
Having a full home inventory will help speed up the process of receiving a claim settlement, should you require one. It will also help you confirm losses if you need them recorded for your tax return.
34. How Do I Perform a Home Inventory?
First, go around the house making a list of each possession with a brief description. Note the makes and models and where you bought each item, when possible. These three tips will help:
- List high-value items individually.
- Take photos of or video walkthroughs of each room.
- Store your completed inventory in a safety deposit box.
Here is a guide to creating your home inventory checklist.
35. Should I Get a New Appraisal for Jewelry?
Yes. Values for the metals and stones that make up your jewelry are constantly in flux, and a few years can make a big difference in the reimbursement amount. Knowing how to get your jewelry appraised for insurance, as well as how often it should get appraised is incredibly important.
36. Are New or Recent Jewelry Appraisals Ever Required?
You may be required to have recent appraisals to present when you add additional coverage for certain items.
37. What Is the Difference Between Cancellation and Nonrenewal?
Nonrenewal is a decision by you or your insurance carrier to discontinue coverage once the policy term is over. A company usually only cancels your active policy when:
- You don’t pay your premium.
- You commit fraud or seriously misrepresent facts during the application process.
- The policy has been active for fewer than 60 days.
38. What Else Can Cause Cancellation of My Homeowners Insurance Policy?
Old roofs and roof damage, excessive multiple claims and severe damage by undisclosed or blacklisted pets are three of the most common reasons for a carrier to cancel a policy.
39. How Does Policy Cancellation Affect My Search for New Homeowners Insurance?
If your policy was canceled due to excessive risk from something on your property such as a badly damaged roof, you can sometimes rectify the issue and get your policy reinstated. But if you filed too many claims or live in an exceptionally high-risk area you may have significant trouble finding affordable insurance after a cancellation.
40. What Are the Parts of a Homeowners Insurance Policy?
Every insurance carrier structures their policies a bit differently, but the following components will all be there.
- Declarations Page: This lists your name and address, your dollar amount of coverage, a description of the insured property, cost of the insurance and contact information.
- Coverage: This contains all the details of protection for your property as well as liability coverage.
- Exclusions: This lists what is not explicitly covered in your policy.
- Conditions: This lists the responsibilities of you and your insurance carrier in the event of loss or damage.
- Endorsements: This lists any extra additions you choose for your policy.
41. What Types of Endorsements Are There in Homeowners Insurance?
There are endorsements for almost every specific situation you can think of. In some cases, an insurance carrier will work with you to create one unique to your needs.
42. What Are the Most Common Home Insurance Endorsements?
Four of the most common endorsements are an earthquake, sewer backup, flood and home-based business endorsements.
43. Do I Need an Earthquake Endorsement in my Homeowners Insurance?
These endorsements generally cover all land movement, including landslides. Even if you don’t live somewhere like California where earthquakes are relatively common, you may want the landslide coverage if you live in an area with landslide risk.
44. Do I Need a Sewer Backup Endorsement in my Homeowners Insurance?
Normally, you can see sewer issues coming from a mile away. Sewer backup endorsements are a good idea if you live in a city known for sewage issues or you know there may be issues with your pipes.
45. Do I Need a Flood Endorsement in my Homeowners Insurance?
A flood endorsement can be a good choice over a separate flood insurance policy if you live somewhere without a high flood risk. If you’re somewhere like Florida, with a high flood risk, you may want both an endorsement and a policy for flooding.
46. Do I Need a Home-Based Business Endorsement?
If your business is small with only one or two employees besides yourself, you may not need a fully-fledged business owners policy. A home-based business endorsement would then be an excellent option.
47. What If I Have a Vacation Home in Another State?
The insurance policy on your primary residence covers your personal liability, so all you need for a second home is an additional property-only policy, usually referred to as a “dwelling policy.”
48. What If I Rent out My Vacation Home?
The renter’s property won’t be covered under your dwelling policy. They will need their own renters policy and you will likely need an endorsement to take on the extra liability.
49. What If I Rent out My Basement?
Your homeowners insurance policy only covers your property and the building itself, so anyone renting a room within your primary residence still needs to get their own renters policy.
50. What If a Family Member Comes to Live With Us?
If someone like your mother-in-law or a child home from college has damage or loss of property, they are likely to be covered by your homeowners policy as they’re part of your family. You should confirm this with your agent.
Local Insurance Done Right
Finding a homeowners insurance policy is one of the most important things you can do to safeguard your investment. Finding the right insurance agency is the first step. Strock Insurance has provided expert advice and robust insurance policies in Central PA for more than 30 years. If you’re looking for personalized service and competitive rates, contact us for an insurance quote today.