Dallas Homeowners Insurance Claimes
What is homeowners insurance and who should buy this type of coverage?
Homeowners insurance is one of the most popular forms of personal lines insurance on the market today. The typical homeowner’s policy has two main sections: Section I covers the property of the insured and Section II provides personal liability coverage to the Insured. Almost anyone who owns or leases property has a need for this type of insurance. Any many times, the lender requires homeowners insurance as part of the requirements in obtaining a mortgage.
Covered losses under a homeowner’s policy can be paid on either an actual cash value basis or on a replacement cost basis. When “actual cash value” is used the owner is entitled to the depreciated value of the damaged property. Under the “replacement cost” coverage, the policy owner is reimbursed an amount necessary to replace the article with one of similar type and quality at current prices.
[Note: this answer is based on the Insurance Services Office's HO-3 policy]
Coverages A and B provide protection to the dwelling and other structures on the premises on an all risks basis up to the policy limits. The policy limit for Coverage A is set by the policy owner at the time the insurance is purchased. The policy limit for Coverage B is usually equal to 10% of the policy limit on Coverage A. Coverage C covers losses to the insured’s personal property on a named perils basis. The policy limit on Coverage C is equal to 50% of the policy limit on Coverage A. Coverage D covers the additional expenses that the policy owner may incur when the residence cannot be used because of an insured loss. The policy limit for Coverage D is equal to 20% of the policy limit on Coverage A. The policy owner determines the coverage limit on Coverage E – Personal Liability – at the time the policy is issued. The coverage limit on Coverage F – Medical Payments to Others – is usually set at $1000 per injured person.
Coverage C, which provides named perils coverage, applies to all your personal property (except property that is specifically excluded) anywhere in the world. For example, suppose that while traveling, you purchased a dresser and you want to ship it home. Your homeowner’s policy would provide coverage for the named perils while the dresser is in transit – even though the dresser has never been in your home before.
Direct damages due to earthquakes are not covered under the standard homeowner’s insurance policy. However, unless you live in an area that is prone to earthquakes, you probably do not need this coverage. If you do live in a part of the country with high earthquake activity you may want to consider adding an earthquake endorsement to your homeowner’s insurance policy. This endorsement will cover damages due to earthquakes, landslides, volcanic eruption and other earth movements.
There are a number of factors you should consider when purchasing any product or service, and insurance is no different. Here is a checklist of things you should consider when you purchase homeowners insurance. First and foremost, purchase the amount and type of insurance that you need. Remember that if your policy limit is less than 80% of the replacement cost of your home, any loss payment from your insurance company will be subject to a coinsurance penalty. Also, determine the amount of personal property insurance and personal liability coverage that you need. Second, determine which, if any, additional endorsements you want to add to your policy. For example, do you want the personal property replacement cost endorsement or the earthquake endorsement?
A named perils policy covers losses that are due to only those perils listed in the policy. The perils typically covered include fire, windstorm, hail, and other direct physical losses. An all risks policy covers losses that are due to any peril except those specifically excluded in the policy. It is important to note that all risks policy provides broader protection than do named perils policies.
There are a number of things you can do to lower the cost of your homeowners insurance. The best thing to do is to shop around. It is not surprising to find quotes on homeowners insurance that vary by hundreds of dollars for the same coverage on the same home. When you shop, be careful to make sure each insurer is offering the same coverage. Many insurers use the ISO policy forms, but this is not always the case. Another way to lower the cost of your homeowners insurance is to look for any discounts that you may qualify for. For example, many insurers will offer a discount when you place both your automobile and homeowners insurance with them. Other times, insurers offer discount if there are deadbolt exterior locks on all your doors, or if your home has a security system. Be sure to ask your agent or company about any discounts you may qualify for. Another easy way to lower the cost of your homeowners insurance is to raise your deductible. Increasing your deductible from $250 to $500 will lower your premium, sometimes by as much as five or ten percent. However, be careful to make sure that you have the financial resources necessary to handle the larger deductible.
Insurance contracts are conditional contracts, which means that policy owners have certain duties that they must perform if a covered loss occurs. Failure to complete these actions can, and sometimes does, result in non-payment by the insurance company for losses that otherwise would have been covered. Required duties include: (1) notifying the insurance company or the agent that a loss has occurred – this should be done as soon as you discover the loss; (2) protecting the property from further damage and/or making any repairs necessary to prevent further damage; (3) preparing a detailed list of the personal items damaged which contains a description of the items, their actual cash value, or their endorsement to your policy; (4) being prepared to show the company and/or the insurance agent the damaged items; (5) completing a statement for the insurance company that details the events that led to the loss – for example, the time the damage occurred, the cause of the losses, etc.
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