Homeowners Insurance
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Homeowner’s insurance protects you if someone injures themselves on your property and you incur legal fees or medical fees. Hazard insurance protects you against the cost of damage from fire, theft, wind or a bursting water pipe.
“Mortgage lenders require borrowers to take out hazard insurance to guard against the loss of the house,” said Leticia Mejias, co-owner of M&M Insurance Associates.
There are three basic types of Homeowner policies:
• HO-1 – A bare-bones policy that provides hazard insurance covering a list of “named perils,” such as wind, as well as liability insurance. HO-1 policies are rarely sold and have been discontinued in many states
• HO-2 – This covers the owner’s house, additional buildings on the property such as sheds as well as personal property including clothes, furniture, books, etc. This policy also includes liability insurance. The HO-2 policy covers more “named perils” than the HO-1 policy. Some of these also pay expenses if the owner has to move into a hotel or apartment while their home is being repaired. HO-2 policies also cover personal property up to a percentage of the value of the policy, typically 50-70%.
• HO-3 – The most common policy used today, it offers the same coverage as HO-2 but protects homes against any damage not specifically excluded, such as a flood which is considered a standard exemption.
What is liability?
Liability occurs when an owner is held responsible for an accident on his property. For example, a visitor trips over a loose step leading up to your front porch and breaks her ankle.
Other types of coverage:
• Cash Value – These policies pay owners the original purchase price of whatever was damaged, less depreciation for wear and tear. So, if the owner bought her house for $50,000 nine years ago, the most she can claim is $50,000 less a near-decade of depreciation, even if the appraised value of the house is higher.
• Replacement Value – This policy covers the cost of replacing or repairing a house or your personal possessions, regardless of the cash value or the original purchase price. Say you have a policy for $175,000. That policy will pay for repairs and replacements up to the policy’s value. A guaranteed or extended replacement value policy will cover those expenses that go above the value of the policy.
What you need to know about choosing an insurance carrier:
Different companies have different ratings as well as different levels of risk they will accept.
“With a homeowners policy, a claim stays on your record for five years, so it’s important to weigh the pros and cons of making a claim,” said Mejias.
She suggests being detailed with your agent and that includes informing them of any loss/claim you might have submitted. This ensures that you get the best and most accurate quote you can from all potential insurance carriers.
According to Mejias, an independent agent can quote multiple carriers and get back to you with three or more quotes.
M&M Insurance can help! Call to set up your appointment today, 402.932-2910.