Why do I need home insurance?

Homeowners insurance provides protection in the event of a loss involving your home or an accident on your property. Without homeowners insurance, if you have a loss or damage to your home, you are liable for the cost of rebuilding/fixing your home, replacing belongings, paying for temporary housing and other financial obligations that come as the result of the incident. In addition to providing peace of mind, homeowners insurance is often required by mortgage lenders. Looking for insurance guidance? Find an agent in your area.

What does a typical homeowners insurance policy cover?

A standard homeowners insurance policy insures the structure of your home, your belongings, liability coverage, and sometimes outbuildings such as a shed or garage. Home insurance also provides additional living expenses coverage in the event your home is uninhabitable due to damage from a loss. For more occurrences that are also covered by homeowners insurance, see our article on seven surprising (and practical) things covered by home insurance.

What isn’t covered by my homeowners insurance policy?

Most home insurance policies don’t cover damage to the home caused by poor home maintenance. Additionally, damage from floods and earthquakes require insurance policies that can be purchased separately from a standard homeowners policy.

Additional options for protection are available with endorsements to your homeowners insurance policy, including:

• Equipment breakdown
• Guaranteed replacement cost
• Water back-up and sump overflow
• Siding and/or roof restoration coverage

Does my homeowners insurance cover me if I’m sued or found responsible for a person’s injury on my property?

A typical homeowners policy covers financial damage from lawsuits for bodily injury or property damage caused to other people, up to the limit you selected on the policy. Liability limits generally start at about $100,000, but it’s a good idea to talk to your independent insurance agent to decide if you should purchase a higher level of protection. An umbrella policy can provide broader coverage and higher liability limits than what is available as a part of your homeowners policy.

What is a deductible, and how does it affect my home insurance premium?

A deductible on your homeowners insurance policy is the amount you pay out-of-pocket when you make a claim, before your insurance begins to cover expenses. You decide on the deductible you feel comfortable with when you apply for your insurance policy. A lower deductible means that you pay less in the event of a claim, but as a result, you will most likely pay a little more for your policy. Increasing your deductible will usually lower your premiums, but be sure that your deductible is a manageable amount for you to pay in the event of a claim. Talk to your insurance agent to make sure your policy and deductible best fits your needs.

What’s the difference between your home’s market value and the replacement value?

Replacement cost is the amount it would cost to rebuild a home from scratch. This figure includes factors like similar materials, degree of craftsmanship, roofing costs, exterior features, heating and cooling systems and more. Non-material costs are considered as well, including the costs of permits, fees, debris removal, contractor labor, overhead and profit.

Market value is the amount for which you would sell your home. This is calculated by more factors such as neighborhood, home values around you and the real estate market.

By making sure your home is insured for its replacement cost, you will be getting the coverage you truly need should you ever suffer a total loss and have to rebuild your home.

Why should I complete a home inventory?

A personal home inventory is a great way to keep updated records of your personal possessions as they change over time. If you have to file a claim for lost, damaged or destroyed property, you will already have a list of what you own, when you bought it and what you paid. Trying to recall your belongings during a loss can be stressful and will often result in missed information. Many companies offer a home inventory tool or downloadable spreadsheet that makes it easy to keep track of your belongings.

When should I get homeowners insurance?

Your mortgage lender will likely require you to have homeowners insurance before you will be able to close on the home. Talk to your independent insurance agent when you begin the home-buying process to make sure you’re covered. Your agent can also provide valuable information that can help you with your home-buying decisions.

How much homeowners insurance do I need?

There are a variety of factors that your independent insurance agent will use to determine the amount of coverage you need, including the costs of your home’s structure, your possessions, additional living expenses and how much liability insurance you need. Your agent will be able to work with you to tailor a policy that suits your needs. Plus, it’s always a great idea to have all your insurance with one company, so be sure to ask about your autos and any other coverage you may need.

Should I buy a separate flood and/or earthquake insurance policy?

Flood or earthquake damage is rarely covered under a standard homeowners insurance policy. If you live in an area that is high risk for floods or earthquakes, you should consider buying flood or earthquake insurance in addition to your homeowners policy. Talk to your independent insurance agent about your risks and options.

How much liability protection do I need?

Our umbrella insurance calculator is a useful tool that can show how much you may have at risk in the event of a major accident or liability lawsuit. The difference between your total assets and the liability limits of your home and auto policies represents a potential gap in coverage. If the total value of your assets amounts to more than the maximum limit your homeowners insurance policy allows, consider an umbrella policy for extra protection.

Is there anything in my home that requires separate insurance coverage?

Items like an engagement ring, other jewelry, collections and heirloom pieces, among others, may not be covered with your standard homeowners policy if they are more valuable than the basic limits on your policy.

The Hanover has two types of coverage for your valuable items: Valuable Items Plus (VIP) blanket property or scheduled personal property.

With Valuable Items Plus (VIP) blanket property coverage, any single item is covered up to $10,000 per claim. This is an optional endorsement on your standard homeowner’s coverage.

With more expensive ticket items, such as engagement rings, scheduled personal property coverage may be more suitable. At less than $2.00 a month per $1,000.00, this provides coverage for the full value of the item. Coverage is provided for mysterious disappearance and breakage too. Neither option requires a deductible.

What factors affect my homeowners insurance premium?

Home insurance rates can fluctuate, just like the cost of living fluctuates. There are a variety of factors to keep in mind when it comes to your home insurance costs, but making sure you have the right home and auto protection is essential for your peace of mind.

The following factors, among others, have an effect on home insurance premiums:

• Amount of coverage elected
• Location
• Fire hazards
• Conditions, materials and age of the home
• Frequency of claims
• Credit score

Why are my rates going up?

Homeowners insurance costs are rising across the nation for most insurance carriers. The increase in costs is due to a variety of factors, including:

• More impactful storms
• Increased material and labor costs
• Larger homes
• Previously owned homes with previous claims

How can I lower the cost of my homeowners insurance policy?

Home insurance rates may be on the rise, but there are some ways to save on your insurance policy. Your independent insurance agent can review your policies and make recommendations on ways to reduce your premium, while ensuring you have the right combination of coverage, value and price. For more tips on how to save on your insurance policy, see our article on eight ways to make the most of your insurance dollars.

Discounts offered by The Hanover include:

• New home discount
• Home buyer discount
• Safety and security devices (such as smoke detectors and central station alarms)
• Affinity groups
• Bundled policy discount
• Payment method discount

---

LC 2019-044