Frequently Ask Questions: Home Insurance

A deductible is a dollar amount you’re responsible for paying in the event of a covered claim. Deductibles are agreed upon in the terms of the policy on the Declarations Page. After you file a covered claim, you’re obligated to pay the portion that’s up to the amount of the deductible. For example, if your claim is worth $3,600 and your deductible is $500, insurance will pay $3,100 of the claim. You pay $500. If the covered loss was valued at $475, you would be responsible for the full amount, with no insurance payment.

Deductible payments do not accumulate across multiple claims. For example, if you file a claim in January, you would owe the $500 deductible. If you filed another claim in March, you would again be responsible for $500. In the $475 example above, your payment of the full claim has no impact on the deductible you’ll owe on your next claim: $500.

Yes. The three most common deductible types for homeowner’s policies are:

• Flat – A flat deductible is a set dollar amount owed for each covered claim. The $500 example above is a flat deductible.

• Percent – With this type of deductible, the policyholder selects a percentage of the house’s dwelling coverage to pay as the deductible. For example, if you have $200,000 in dwelling coverage and a 2.5% deductible, you’d owe $5,000 for each covered claim.

• Split – A split deductible uses a combination of percent and flat deductibles depending on the loss type. For instance, the policy might specify that, in the event of a wind and hail-damage claim, a percent deductible will apply. For all other loss types, a flat deductible might apply.

Generally speaking, the higher your deductible amount, the less you pay in premium. The lower the deductible amount, the more you pay in premium. It’s important to select a deductible amount you reasonably believe you can pay. Keep in mind, too, that if you have more than one claim in a short period of time, you’ll have to pay that deductible amount for each separate claim.

Yes. A certain amount of liability coverage is automatically built into most homeowner’s policies. Homeowner’s liability shields you against loss and or injury to other people you are legally ordered to pay. If your dog bit your neighbor, for example, your liability coverage would cover the cost of medical expenses, any lost wages arising from missed work time, etc. Your liability coverage would also help cover your legal fees in the event you’re sued for a claim against you.

It’s not inconceivable that the liability portion of your homeowner’s policy could hit its payout limits in the event of a serious claim against you. This is especially true if you were sued by someone claiming you caused their loss or injury. If you lost the suit, the award could easily exceed the payout limits of your normal homeowner’s policy, potentially devastating your finances.

This is when a Personal Umbrella Insurance Policy would be extremely useful. Personal Umbrella Insurance supplements your existing homeowner’s policy and begins paying when you reach the payout limits on the standard policy.

Standard homeowner’s policies provide only limited coverage for jewelry and other personal belongings. This is why you might want to invest in jewelry coverage and/or a Personal Articles Floater.

Yes. Taking an inventory, including photographs, is always a good idea. In the event of a covered claim, you’ll be able to more effectively catalogue and estimate your losses. Some providers even offer forms to make the process of inventorying your stuff easier. Talk to your provider about it.

You’ll need to purchase the appropriate coverages to receive this kind of reimbursement. Such coverage will reimburse you for housing, food and other expenses within the limits established by the policy.

Standard homeowner’s policies typically cover losses arising from:

• Fire
• Lightning
• Tornadoes
• Wind storms
• Hail
• Explosions
• Smoke
• Vandalism
• Theft

Generally speaking, the following types of events aren’t covered by standard homeowner’s policies and require separate policies:

• Earthquakes
• Flooding
• Nuclear accidents
• Warfare

Yes. Most homeowner’s policies will cover this kind of event.

If you add rooms to your home or other additions, or make a significant purchase (e.g., jewelry, computer equipment, etc.), it’s a good idea to review your policy and consider modifying your coverages.

There are a number of measures you can take to lower your premiums:

• Install window locks and deadbolt door locks.

• Install an alarm system, including outside coverage, that connects directly to your local police department.

• Install smoke detectors and keep them properly maintained and functional.

• Install inside fire-suppression sprinklers.

• Install a fire alarm that sends an alert directly to your responding firehouse.

• Stop smoking.

• Bundle your homeowner’s insurance with other policies (e.g., auto) from the same provider.

You might have heard the old saying that “past is prelude to future.” In the insurance business, this axiom is taken seriously. Statistics show that your history of loss claims is a strong predictor of your future loss claims. This is why your claims history is taken into account when a provider calculates your premiums. Your claims history can also be used to deny coverage entirely.

In the event you’re denied coverage, or your rates are negatively impacted by your claims history, the Federal Fair Reporting Act (FCRA) obligates the provider to send you an FCRA notice. This notice will include information for contacting the consumer reporting agency that gave the provider your claims history information. You can then contact that agency to verify the information in your report and correct any mistakes.