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Homeowners Insurance Guide Here Homeowners INSURANCE GUIDE The Pennsylvania Insurance Department is here to help you understand homeowners insurance. In the next few pages you will learn about types of coverage available, some tips on how to shop, and what you should do if you need to make a claim. Insurance policies can vary. This guide is intended to help you understand homeowners insurance. The information is general and not specific to your insurance policy. If you have specific questions about your coverage, you should consult your agent or insurance company. Your home is more than just shelter; What Is Homeowners it’s an asset worth protecting. Insurance? Your homeowners insurance policy is a legal contract between you and your insurance company. Let’s Look at Coverage in More It protects you against financial loss if there is Detail damage to your home and your possessions and liability in case someone gets hurt in your home or Homeowners insurance policies usually contain a on your property. package of coverages that offers protection when a peril occurs. A peril is the cause of a possible loss, Keep your policy in a safe place and know the like a fire, that you protect yourself from when you name of your insurer. Be sure to discuss with your purchases an insurance policy. insurance company the terms in your policy. If you have questions contact your insurance agent or Dwelling coverage pays for damage to your house company for clarification. If you still have questions, and structures attached to your house. This includes visit our website at www.insurance.pa.gov or damages to fixtures such as plumbing, electrical you can write to or call us. wiring, heating, and permanently installed cooling systems. Do I Need to Buy Homeowners Other Structures coverage pays for damage to Insurance? structures not attached to the dwelling. These include detached garages, sheds, fences, guest houses, etc. Homeowners insurance is not mandatory in Pennsylvania but most banks or lenders will require Personal Property coverage reimburses you for you to cover your home for at least the amount damage to or theft of your personal property. This of the mortgage. If you are covers things like furniture, appliances, electronics, looking for a homeowners lawn equipment, clothing, etc. It also protects your insurance policy, always belongings even when they aren’t on your property. shop around and coverage pays for compare coverage and Loss of Use additional living if you can’t live in your home (because price. Homeowners expenses of a covered peril) while it’s being repaired. insurance protects your home and your Medical Payments to Others provides coverage personal property. It for medical bills for people hurt on your property may also protect you or hurt by your pets. against lawsuits if someone gets hurt on your property. Personal Liability protects you, your relatives Below is more information on the different types of in the household and residents in your household coverage a homeowners policy can provide. under the age of 21 if you are sued and found legally responsible for injury or damage to their property. *You are not required to purchase insurance from the This coverage also extends to students under the age insurer recommended by the lender. of 24 enrolled full-time at school or college (with certain exceptions). Please refer to the Glossary found on page 14 for definitions of the terms in bold face. 2 How Much Coverage Should I Buy? on a claim. For an additional Your coverage limits are the cost, consider an inflation guard most your insurance company endorsement which raises the will pay. Your homeowners amount of your dwelling coverage insurance coverage will depend on annually in line with inflation. your individual needs, as well as Other Structures limitations set by your insurance company. Higher limits may be Typical coverage for these available for an additional cost. structures is limited to 10 percent Here are some things to keep in of the dwelling coverage limit. mind when you are trying to figure out how much coverage you should buy: Personal Property Dwelling Typically coverage for personal property is provided at a percentage of the dwelling coverage limit. You Replacement cost is the amount to replace or can choose to insure your personal property at the rebuild your home or repair damages with materials replacement cost or actual cash value. of a similar kind and quality without deducting for depreciation. Often the cost to rebuild a home in Also, if you are away for business or on vacation, accordance with current building codes with new your personal property brought with you is raw materials at current labor rates is significantly typically insured for 10 percent of your homeowner’s higher than the proceeds you would receive if you policy’s personal property coverage or $1,000, whichever is greater.(unless you ask for a higher limit) Your homeowners insurance Keep in mind that coverage for some property such as jewelry, furs, antiques, coins, guns, coverage will depend on your and art may be limited. You can purchase individual needs, as well as additional coverage called a scheduled personal property endorsement to better protect these limitations set by your insurance items. company. Loss of Use Typical coverage for loss of use is 20 percent were to sell your home. The is not replacement cost of the dwelling coverage limit. the same as the market value of your home, which includes your land and depends upon what someone Personal Liability is willing to pay to buy your property. Actual cash You choose the amount of liability protection that is value is the replacement cost of your home minus appropriate for your situation. Most policies age and wear and tear. Many times an actual cash offer $100,000 with higher available value policy does not pay enough to fully return limits your home to the way it was before an incident. for an additional cost. Medical Payments You should review your amount of coverage annually. A good rule of thumb is to insure your Basic amounts of coverage are usually $1,000 home for at least 80% of its replacement value. If per person and higher limits may be available your coverage drops below 80 % of full replacement for an additional cost. cost, the company may reduce the amount paid 3 What Types of Homeowners Policies Are Available? As mentioned before, homeowners insurance If you have an older home for which the cost policies usually contain a package of coverages to rebuild is significantly higher than its that offer protection from loss when a peril market value, the Modified Coverage Form occurs. Some policies are specifically for single- (Form 8) is available. Insurers generally do family homeowners, condominium owners, not want to offer standard insurance coverage and renters. Some policies cover all perils that far exceeds the market value of the except those specifically excluded; others cover home because this may provide an incentive only the perils specifically named in the policy. to commit insurance fraud. The Modified The different types of homeowner policies are Coverage Form provides “functional known as Forms. Talk to your agent or insurance replacement cost” coverage meaning older company to determine which Form best fits your materials used in the home’s construction that needs. are no longer available can be repaired using materials commonly available today. The form Let’s Talk About the provides similar, but less coverage than the Different Forms Broad Form. The Homeowners Broad Form (Form 2) Your landlord’s homeowners insurance does covers the dwelling, other structures (such as not cover your belongings. Often referred to a detached garage or shed), personal property, as renters insurance, the Contents Broad personal liability, and medical payments. Form (Form 4) provides protection against The Broad Form policy covers perils specifically damage to or theft of your personal property. named in the policy. In a Broad Form policy It can also protect you if someone falls or gets if the peril is not named, it is not covered. hurt on the part of the premises you rent. Renters insurance is often overlooked. For a The Homeowners Special Form (Form 3), small premium, you can save a lot of money also covers damage to the dwelling, other if something happens. You must request and structures, personal property, personal obtain the specific amount of coverage you liability, and medical payments. The difference need with a renters insurance policy. between the Broad Form and the Special Form is that the Special Form tells you specifically which If you own a condominium, the Unit-Owners perils it will not cover. This form provides more Form (Form 6) is for you. This form is coverage for the home and other structures than the designed for condominium owners and offers Broad Form. coverage similar to that provided to homeowners with the Broad Form. This type The Homeowners Comprehensive Form of policy insures the contents and property (Form 5), provides broader coverage than not covered by the condominium association’s Forms 2 and 3, especially for your personal policy. You must request and obtain the property. Many additional coverages available on specific amount of coverage you need. an optional basis on Form 3 are automatically included in the Homeowners Comprehensive Form. 4 What is Not Covered? How Do I Create a The coverage provided depends upon the type Home Inventory Checklist? of policy you buy, but there are some common A home inventory checklist can be invaluable when exclusions found in most homeowners policies. They deciding how much insurance coverage fits your include but are not limited to earthquake (for which life situation.
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