Massachusetts Homeowners Insurance 101
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While coverage varies from company to company, and even from policy to policy depending on options chosen, most standard homeowners insurance policies provide coverage for the following:
Section I: Property Coverages
Coverage A – Dwelling Coverage. This is the amount of insurance you have on your home. It should represent the full replacement cost of your home, including debris removal. Depending on a variety of factors, this number can be more or less than the market value of your home. Your Personal Account Representative at Hometown Insurance Agency will work with you to help determine the amount of insurance you need.
If the reconstruction cost of your home has gone up (or down) in recent years it is important that your homeowners insurance reflects these changes. Many homeowners fail to take the time to update their level of coverage, even though reconstruction costs have skyrocketed. Chances are, the cost to rebuild your home in today’s market has increased since you first bought your policy, and it is important to update your coverage to reflect these new realities. Many policies include protection against inflation, but it’s still a good idea to periodically review your coverage limits.
Coverage B – Other Structures Coverage. Storage sheds, detached garages and other structures also need to be protected. Most homeowners policies automatically provide at least some coverage for Other Structures located on your insured premises. The limit for Other Structures Coverage is usually equal to 10% of your Coverage A limit, with additional amounts available.
Coverage C – Personal Property (Contents) Coverage. Personal Property Coverage, sometimes called Contents Coverage, is designed to cover your personal property such as furniture, clothing, and appliances. This limit is usually 50%-70% of your Coverage A limit depending on your specific policy.
While your homeowners insurance policy generally includes a standard amount of coverage for your possessions, it is important that you make sure the standard amount of coverage is sufficient for the items you own. If you have items of extraordinary value it is important to check with your Personal Account Representative at Hometown to determine if additional coverage is warranted. Most homeowners policies limit the amount of coverage they provide for items of unusual value, such as jewelry, furs, collectibles, musical instruments, and firearms. These items should be insured separately under a Personal Articles Policy.
It is also a good idea to document the items you own by filming or photographing them. The wide availability of digital still and video cameras makes it easier than ever before to document your possessions. Just be sure to keep your video or photo library in a safe deposit box or at the home of a relative or trusted friend.
Coverage D – Loss of Use Coverage. If a major loss makes your house uninhabitable and you have to move out temporarily while it’s being repaired, you may incur expenses above and beyond your normal living expenses. Loss of Use coverage pays for the additional costs you incur for housing and other living expenses which are above and beyond your normal costs. This limit is usually equal to 20% or more of your Coverage A limit.
Section II: Liability Coverages
Coverage E – Personal Liability Coverage. If your dog bites a guest, someone falls down your stairs, or your child throws a ball through a neighbor’s window, you may be found legally responsible for these actions. Personal Liability coverage helps pay for the costs of these damages, including the cost of legal defense. It does not cover damage to your property.
Coverage F – Medical Payments to Others – Pays reasonable charges for necessary medical expenses, up to your policy limit, for guests who suffer bodily injury while at your insured location and with permission to be there. Medical Payments coverage does not apply to you or regular residents of your household.
Optional Coverages (endorsements):
Contents Replacement Cost Coverage – Standard homeowners insurance policies pay actual cash value for damaged property. Actual cash value is the cost to replace the property minus depreciation. Contents Replacement Cost Coverage pays replacement value on property damaged by a covered loss…with no deduction for depreciation…subject to your policy limits and deductibles. Special limits apply to certain items such as jewelry, watches and furs. Every homeowners policy should include this optional coverage.
Enhanced Home Replacement Cost Coverage – In the event of a major catastrophe such as a hurricane, the cost of building materials and labor may skyrocket overnight. While you may have been fully insured at the time of the hurricane, high demand and low supply of materials and labor may leave you underinsured immediately following the loss. This optional endorsement helps to make up for the increased costs. Since the cost of this endorsement is usually less than $100 per year, we highly recommend that all homeowners purchase this optional coverage.
Water Backup Coverage – This recommended coverage endorsement provides coverage, up to a chosen amount, for water that backs up through your drain or sewer, or overflows from your sump pump.
Special Coverage for Contents – This endorsement converts coverage for Personal Property from “Named Perils” to “Open Perils”.
Inflation Protection – Inflation can eat away at the value of just about everything, including the value of your homeowners insurance policy. For that reason you may want to consider adding inflation guard protection to your policy. Some policies include this protection automatically, but others do not. If your policy includes this coverage, the amount of insurance on your home will automatically be adjusted each year based on an inflation guard %.
For more information about the many homeowners insurance coverages and options available to you, contact our office today. www.savinjones.com
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