Homeowners Insurance

We’re sure that you’ve been told, “Your home will be the most valuable asset you will ever own.” Protecting this asset is vital to you and your family. At Raleigh Wills Insurance Services we construct homeowners insurance policies that will protect your home.

Homeowners insurance covers two areas. It covers damage to your property and covers liability or legal responsibility for any injuries and property damage policyholders or their families cause to other people.

Damage caused by most disasters are covered, but there are exceptions. Standard homeowners policies do not cover flooding, earthquakes, or poor maintenance. Earthquake coverage is available either in the form of an endorsement or as a separate policy. Most maintenance related problems are the homeowners’ responsibility.

Standard homeowners insurance policies include four essential types of coverage

1. Coverage for the Structure of the Home

This part of a policy pays to repair or rebuild a home if it is damaged or destroyed by fire, hurricane, lightning, hail, or other disaster listed in the policy. It will not pay for damage caused by a flood, earthquake or routine wear and tear. Most standard policies also cover structures that are not attached to a house such as a garage, tool shed or gazebo.

2. Coverage for Personal Belongings

Furniture, clothes, appliances, TV’s, sports equipment and other personal items are covered if they are stolen or destroyed by fire, hurricane or other insured disasters. The policy includes off-premises coverage. This means that belongings are covered anywhere in the world. Expensive items like jewelry, furs and silverware are covered, but there are usually dollar limits if they are stolen. To insure these items to their full value, individuals can purchase a special personal property endorsement or floater and insure the item for its appraised value.

3. Additional Living Expenses

This pays the additional costs of living away from home if your house is inhabitable due to damage from a fire, storm or other insured disasters. It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt.

4. Liability Protection

This section of the policy covers against lawsuits for bodily injury or property damage that policyholders or family members cause to other people. It also pays for damage to third parties caused by pets. The liability portion of the policy pays for both the cost of defending the policyholder in court and any court awards—up to a limit that you choose for the policy. Coverage is not just in the home but extends to anywhere in the world. Liability limits start at $100,000 and can be increased to as high as $1,000,000.

Types of Homeowners Insurance Policies

People who own the home they live in have several policies to choose from. The most popular policy is the HO-3. It provides coverage for the structure of the home, personal belongings, additional living expenses, as well as personal liability coverage. Most policies protect against 16 disasters or perils listed below.

Fire or lightning
Windstorm or hail
Explosion
Riot or civil commotion
Damage caused by aircraft
Damage caused by vehicles
Smoke
Vandalism or malicious mischief
Theft
Volcanic eruption
Falling object
Weight of ice, snow or sleet
Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance
Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system
Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance
Sudden and accidental damage from artificially generated electrical current

The HO4-policy was created specifically for those who rent the home or apartment they live in. It covers a policyholder’s belongings. Additional Living Expenses coverage is included as well as personal liability coverage for damage the policyholder, family members and pets may cause to third parties.

The HO-6 policy was designed for owners of condominium and cooperative units. It provides coverage for belongings and the structural parts of the condominium or co-op that the policyholder owns. Additional Living Expenses coverage is included as well as personal liability coverage for damage the policyholder, family members and pets may cause to third parties.

Levels of Coverage

There are three coverage options:

1. Actual Cash Value

This option pays to replace the home or possessions minus a deduction for depreciation.

2. Replacement Cost

This option pays the cost of rebuilding or repairing the home or replacing possessions without a deduction for depreciation.

3. Extended Replacement Cost

This option pays a certain percentage over the structural limit to rebuild the home. This gives protection against sudden increases in construction costs due to a shortage of building materials after a widespread disaster or other unexpected situations. Generally, it is 25 to 50 percent more than the structural limit of the policy. For example, if the structural limit is $500,000, the option provides up to an additional $125,000 or $250,000 of coverage. This offers the best financial protection against disasters for a home.

It generally won’t cover the cost of upgrading the house to comply with current building codes. However, an endorsement (or an addition to) the policy called Ordinance or Law can help pay for these additional costs.