Consumer's Guide to Home Insurance

Consumer’s Guide

9/06

A Consumer’s Guide to National Association of Insurance Commissioners National A Consumer’s Guide to Home Insurance

Utah Wyoming Department of Insurance Department of Insurance State Office Building, Room 3110 Herschler Building, 3rd Flr E. Salt Lake City, UT 84114-6901 122 W. 25th St. (801) 538-3800 Cheyenne, WY 82002-0440 (800) 439-3805 (toll-free) (307) 777-7401 www.insurance.utah.gov (800) 438-5768 (toll-free) www.insurance.state.wy.us Vermont Department of Banking, Insurance, Securities and Health Care Administration 89 Main St, Drawer 20 Montpelier, VT 05620-3101 (802) 828-3301 www.bishca.state.vt.us

U.S. Virgin Islands Department of Banking and Insurance Kongens Gade, No 5049 Charlotte Amalie © 1993, 2006 National Association of Insurance Commissioners St. Thomas, Virgin Islands 00802-6487 All rights reserved. (340) 774-7166 www.ltg.gov.vi

Virginia State Corporation Commission P.O. Box 1157 Richmond, VA 23218 (804) 371-9741 National Association of Insurance Commissioners (800) 552-7945 (toll-free) Insurance Products & Services Division www.scc.virginia/division/boi.gov 816-783-8300 Fax 816-460-7593 Washington www.naic.org/insprod Office of the Insurance Commissioner [email protected] P.O. Box 40258 Olympia, WA 40258 Printed in the United States of America (360) 725-7000 www.insurance.wa.gov

West Virginia , No part of this book may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic Department of Insurance or mechanical, including photocopying, recording, or any storage or retrieval system, without written permission from the P.O. Box 50540 NAIC. Charleston, WV 25305-0540 (304) 558-3354 (888) 879-9842 (toll-free) State Departments www.wvinsurance.gov

Wisconsin Office of the Commissioner of Insurance Executive Headquarters Securities Valuation Office Government Relations 2301 McGee Street, Suite 800 48 Wall Street, 6th Floor Hall of States Bldg. P.O. Box 7873 Kansas City, MO 64108-2662 New York, NY 10005-2906 444 North Capitol NW, Suite 701 Madison, WI 53707-7873 816-842-3600 212-398-9000 Washington, DC 20001-1509 (608) 266-3585 202-624-7790 (800) 236-8517 (toll-free) www.oci.wi.gov

© 1993, 2006 National Association of Insurance Commissioners 13 State Departments 12 www.doi.state.nv.us (800) 992-0900 (toll-free) (775) 687-4270 89701-5491 Carson City, NV 788 FairviewDr, Suite300 Department of Insurance Nevada www.doi.ne.gov (402) 471-2201 68508 Lincoln, NE St, Suite400 941 ‘O’ Terminal Building Department ofInsurance Nebraska www.sao.mt.gov (800) 332-6148(toll-free) (406) 444-2040 59601 Helena, MT 840 Helena Ave Office State Auditor’s Montana www.insurance.mo.gov (800) 726-4390(toll-free) (573) 751-4126 Jefferson City, MO65102-0690 P.O. Box690 Department ofInsurance Missouri www.doi.state.ms.us (800) 562-2957(toll-free) (601) 359-3569 Jackson, MS39205 P.O. Box79 Department ofInsurance Mississippi www.commerce.state.mn.us (651) 296-4026 St. Paul,MN55101-2198 85 7thPlaceEast,Suite500 Department ofCommerce Minnesota www.michigan.gov/ofis (toll-free) (877) 999-6442 (517) 335-3167 Lansing, MI48909-7720 P.O. Box30220 Services Office ofFinancial andInsurance Michigan www.state.ma.us/doi (617) 521-7794 02110-2208 Boston, MA One SouthStation, 5thFlr Department ofInsurance Massachusetts www.oid.state.ok.us (800) 522-0071 (toll-free) (405) 521-2828 Oklahoma City, OK73152-3408 P.O. Box53408 Department of Insurance Oklahoma www.ohioinsurance.gov (614) 644-2658 43215-1067 Columbus, OH 2100 Stella Ct. Department ofInsurance Ohio www.state.nd.us/ndins (800) 247-0560(toll-free) (701) 328-2440 58505-0320 Bismarck, ND 600 E.Blvd Ave, 5thFlr Department ofInsurance North Dakota www.ncdoi.com (800) 662-7777(toll-free) (919) 733-3058 27699-1201 Raleigh, NC 1201 MailServiceCenter Department ofInsurance North Carolina w (212) 480-2289 10004-2319 New York,NY 25 BeaverSt. Department ofInsurance New York www.nmprc.state.nm.us/inshm.htm (800) 947-4722(toll-free) (505) 827-4601 Sante Fe,NewMexico87504-1269 P.O. Box1269 Department ofInsurance New Mexico www.njdobi.org (toll-free) (800) 446-SHOP (609) 292-5360 08625-0325 Trenton, NJ P.O. Box325 20 W. State St. Department ofBankingandInsurance New Jersey www.nh.gov/insurance (800) 852-3416(toll-free) (603) 271-2261 03301 Concord, NH 21 FruitSt, Suite14 Department ofInsurance New Hampshire ww.ins.state.ny.us © 1993, 2006 National Association of Insurance Commissioners A Consumer’s GuidetoHomeInsurance A Consumer’s www.tdi.state.tx.us (800) 578-4677 (512) 463-6469 78714-9104 Austin, TX P.O. Box149104 Department of Insurance Texas www.state.tn.us/commerce (800) 342-4029 (615) 741-2241 37243-0565 Nashville, TN 500 JamesRobertsonParkway Davey Crockett Tower, 5thFlr Department ofCommerceand Insurance Tennessee www.state.sd.us/drr (605) 773-3563 Pierre, SouthDakota57501-3185 445 E.Capitol Ave Department ofRevenueandRegulation South Dakota www.doi.state.sc.us (803) 737-6212 29202-3105 Columbia, SC P.O. Box100105 Department ofInsurance South Carolina www.dbr.state.ri.us (401) 222-2223 Providence, RI02903-4233 233 RichmondSt, Suite233 Department ofBusinessRegulation Rhode Island www.ocs.gobierno.pr (787) 722-8686 San Juan,PuertoRico00910-8330 Fernandez JuncosStation P.O. Box8330 Department ofInsurance Puerto Rico www.insurance.state.pa.us (717) 783-0442 17120 Harrisburg, PA 1326 Strawberry Square Department ofInsurance Pennsylvania www.oregoninsurance.org (800) 877-4894(toll-free) (503) 947-7980 Salem, OR97309-0405 P.O. Box14480 Department ofInsurance Oregon National AssociationofInsuranceCommissioners if theseNAICmodelshavebeenenactedin yourstate. term care insurance.You tofindout may check withyourstateinsurancedepartment you willfindseveralreferences tosuchNAICmodellawsorregulations related tolong- meet theneedsoftheirmarketplaceandconsumers.Asyouread through thisguide, states’ use.Statesthatchoosetodosomayadoptthemodelsintactormodifythem to this through aseriesofmodellaws,regulations andguidelines,developedforthe for thedevelopmentofuniformpublicpolicywhenuniformityisappropriate. Itdoes protecting consumers. guide isoneexampleofworkdonebytheNAICtoassiststatesineducatingand and theNAIChelpsregulators fulfillthatobligationinanumberofdifferent ways.This responsibility ofthestateregulators istoprotect theinterests ofinsurance consumers, regulators inall50states,theDistrictofColumbiaandfiveU.S.territories.Theprimary Itsmembersconsistofthechiefinsurance association ofstategovernmentofficials. About theNAIC… www.naic.org Fax 816-783-8175 (816)-842-3600 City,Kansas MO64108-2604 Suite 800 2301 McGeeStreet Another way the NAIC lends support tostateregulatorsAnother waytheNAIClendssupport isbyproviding aforum The NationalAssociationofInsuranceCommissioners(NAIC)istheoldest

A Consumer’s Guide to Home Insurance A Consumer’s Guide to Home Insurance department and verify that the company and the agent you are dealing with are licensed Table of Contents in your state. It is illegal for unlicensed insurers to sell insurance. Business cards are not proof of a licensed insurance agent or company. If you do business with an unlicensed agent or company, you have no guarantee that the coverage you pay for will ever be honored. If you purchase insurance from companies not legally doing business within your state, you will not be protected by the guaranty fund should the company fail. Introduction 1 Every state has a safety net to protect insurance consumers from financial loss in the Commonly Asked Questions 1 rare instance that a company becomes insolvent. This safety net is called a “guaranty How Much Home Insurance Do I Need? 1 fund.” The guaranty funds are established by state law and are composed of licensed What Affects Home Insurance Prices? 1 companies in the state. They pay the claims of policyholders and other claimants of an What Deductible Should I Choose? 2 insolvent company. The money to pay the claims against the insurance company comes from assessments made against all of the insurance companies that are members of the Basic Coverages Available 2 guaranty fund. Property Damage 2 If you are contacted by an unlicensed agent or company, call your state insurance Additional Living Expenses 3 department immediately so that regulatory action can be taken.By doing so, you may Personal Liability 4 protect someone less knowledgeable than you from being victimized. Medical Payments 4 You should be aware that a home insurance policy is a legal contract. It is written so that your rights and responsibilities as well as those of the insurance company are Insurance Forms 4 clearly stated. When you purchase home insurance, you will receive a policy. You Home Insurance 4 should read that policy and make certain you understand its contents. If you have Renters’ Insurance (HO-4) 5 questions about your insurance policy, contact your insurance agent or company for Condominium Insurance (HO-6) 5 clarification. Keep your policy in a safe place and know the name of your insurer. If you Optional Coverages You May Wish to Consider 5 still have questions, call your state insurance department. Smart Shopping 7 Seek Unbiased Information 7 Your State Insurance Department Loss Chart 8 Your state insurance department exists to serve you. Where to Shop 8 State insurance departments can be a source of unbiased Price Quotations 9 information and assistance to you. For Your Protection 9 State insurance departments regularly publish written information valuable to the home insurance consumer. They Your State Insurance Department 10 may have additional consumer guides that outline your specific rights and responsibilities under your state’s List of State Insurance Departments 11 insurance laws and regulations. They also may publish premium comparison reports for your use in shopping for insurance. If you do not understand your insurance policy,

Insurance Forms Insurance you can call your state insurance department and ask questions. If you have a complaint against an insurer, it is always best to contact your insurance company first hand attempt to settle the matter. Most insurance companies have policyholder service offices set up precisely to handle such questions. If you still are not satisfied, contact your state insurance department.State insurance departments have complaint specialists to help you with your problem. Although they cannot represent you legally against an insurance company or adjustor, they can make appropriate investigation to potential violations of insurance laws or regulations based upon your complaint.

8 Insurance Forms coverage they need.Insurance agentsare paidonacommission basis. theyhavereceived fromwhat kindof claimservice thecompanies theyrecommend. askthem agents. Ask themabouttheirexperience regarding Inparticular priceandservice. your neighbors,relatives andfriendsforrecommendations oninsurancecompanies and forcompanies andagentsinyourarea.pages ofthetelephone directory Inaddition,contact insurance companies markettheirproducts. toShop Where c o m Consumers oftenrely ontheirinsurance agentorcompany totellthemwhatkind of Checkthenewspaperandyellow Most insurancecompanies andmanyagentsadvertise. When youbegintocontact insurers, there are anewthingsyoushouldknowabouthow p e t i t i o n o n l y w o r k s i f t h e c o n s u m e r s h o © 1993, 2006 National Association ofInsurance Commissioners p s f o r c o v e r A Consumer’s GuidetoHomeInsurance A Consumer’s a g e . R e m e m b e r , A Consumer’s GuidetoHomeInsurance A Consumer’s Commonly AskedQuestions more detailaboutspecialconditionsofprograms inyourstate. to meetspecialneedsincludingavailability. for Contactyourstatesinsurancedepartment of fire andextendedcoverages.Itdoesnotaddress thestatespecialprograms established coverages foundina“home-owners”policy. Itdoesnotaddress themore limitedofferings and property coverages.TheConsumerGuideprincipallyaddresses thepackageof and makeyourowndecisions. best valueforyourmoney, youmusttakeresponsibility foryourhomeinsurancepurchase yourlendermayrequiremortgaged, the purchase ofinsuranceonyourhome.To getthe increase thevalueyoureceive. information onhowtomakedecisionsthatcanlowerthecostofyourhomeinsurance and W H © 1993, 2006 National Association ofInsurance Commissioners o h w replacement costprotection (seepage 4). your local fire determineyour fire department protection class. • • a limitedformofcoverage. oldhomesor offer companies eithermaynotinsure very • • recommended byyourlender. individual circumstances.You are notrequired topurchase insurancefrom theinsurer Thismaybeeither toolittleormuchcoverageforyour the amountofmortgage. The coveragesoffered tohomeownersare typicallycontainedinapackageofliability Although homeinsuranceisnotrequired bylawinmoststates, ifyourhomeis Home insuranceisanexpensivepurchase formanyAmericans.Thisguide provides place torebuild theirhomeifitis destroyed. coveragein your ownpocketifdisasterstrikes.Mostpeople willwanttohavesufficient lawsuits resulting from yournegligence. • • • a t M A A P L T P L L u f o e e r o f y g c e o n g c e p l h c i p a a d c e o t l H l e e y s f o r S r F o H H t f e i m y R R r o C o l e f e e u e P m o q q P P s r n I e u u e e o r n r s o i o i : Newhomes mayqualifyfordiscounts insomestates. Someinsurance t s t I r r e n t r u t e e e u e c s r m m c c t c u a i t t t e e r n o e i i i a o n o n o n c n n t e n: Your home’s distancefrom afire hydrantand thequalityof t n : Thebetteryourcoverage,thelessyouwill havetopayoutof s s c : You needenoughliabilitycoveragetoprotect yourselffrom : Framehouses usuallycostmore toinsure thanbrick. D : Your lendermayrequire youtocoverthehouseforatleast : Insurers mayimposesomecoverage requirements for other peopleordamagetheirproperty. Everyone property. Tenants Owners Why BuyHomeInsurance? e o P r I i N c e e s e : toprotect bothyourhouseandpersonalproperty. : toprotect yourfurniture andotherpersonal ? d : protection againstliabilityforaccidents thatinjure ? 1 Introduction A Consumer’s Guide to Home Insurance A Consumer’s Guide to Home Insurance in a designated flood plain don't assume you will never incur flood damage or that you • Amount of Coverage: The amount of coverage you buy for your house, contents and are not eligible for flood insurance. For more information about federal flood insurance, personal liability will affect the price you pay. contact the National Flood Insurance Program at 1-800-638-6620. • Deductible Amount: Your choice of a higher deductible will reduce the price for home insurance. • Earthquake Insurance • Discounts: In some states, insurers offer lower prices for such things as insuring your Earthquake insurance is available through most insurance companies at an additional home and car with the same company and installing dead-bolt locks or alarm systems. cost. It is normally issued as an endorsement and attached to your home insurance • Credit Reports: In many states, insurers use your credit history as a factor in policy. If you live in California, coverage is available from the California Earthquake considering whether to sell you insurance and determine what price you will be charged. Authority. • Windstorm Coverage What Deductible Should I Choose? Most home insurance policies cover damage caused by windstorm and hail. However, in • The deductible applies only to coverage on your house and personal property. It is some areas of certain states, mostly coastal, this coverage is excluded from the standard the amount you have to pay out of pocket on each claim. policy. For more information, ask your insurance agent or insurance company if this • A policy with $100 deductible will cost more than one with $250 deductible. Higher peris covered by your policy. deductibles may be available at a reduced price. Basic Coverages Available Smart Shopping Whether you own or rent, there are different packages of home insurance offered to The key to comparison shopping is to know what insurance coverages you need protect your home and belongings. Each package protects against a specified number of before you start and then to find out how much those coverages will cost from a number perils. Perils are events that cause damage to property. Three examples are fire, windstorm of insurers. Comparison shopping takes time but will save you money. and theft. In addition to coverage for named perils, each package policy usually contains Different companies charge different rates for the same coverage. No one wants to pay four additional types of coverage: property damage, additional living expenses, personal more for their home insurance than they absolutely have to. The only way you can make liability and medical payments. Home insurance policies apply to most owner occupied certain you are not paying too much is to shop around. Find out what different insurers single-family homes, and are modified slightly for apartments and condominiums. charge or identical products and services.

Property Damage Seek Unbiased Information Property damage coverage helps pay for damage to Information is available to consumers from a number of unbiased sources. These your home and personal property. Other structures such sources include public libraries, state insurance departments, the Internet, consumer as tool sheds, detached garages, houses and their groups and consumer publications. contents are also covered. You should check with your Because the insurance industry, like many other industries, has developed many agent or your insurance company to determine if the words not commonly used by the average person, consumers may need to find a good amount of coverage on other structures is sufficient. glossary or dictionary of insurance terms from the public library. Personal property is the contents of your home and Consumers may also obtain a wide variety of information from their state insurance other personal belongings owned by you or family department.Most insurance departments publish home insurance guides that contain members who live with you. information specific to that particular jurisdiction. Every state insurance department has Home insurance policies may provide limited personnel available to answer questions regarding home insurance coverage. Insurance Forms coverage for small boats; however, most home insurance policies do not cover motorized Many state insurance departments help the citizens of their state to comparison shop vehicles unless they are unlicensed and used only at your home. Your insurance agent or by publishing premium comparisons. Premium comparisons survey the insurance Basic Coverages Available Coverages Basic your insurance company can help you find appropriate coverage for your car, boat, companies with regard to their rates for a number of locations and typical policy-holders. snowmobile or other recreational equipment. The results of the survey are published for public use. If your insurance department Some forms of personal property, such as, silverware, computers, guns, money, publishes a premium comparison, it can only be used to give you a general idea of rates expensive antiques and jewelry, have limited coverage under your homeowner’s policy and available in your state. For specific information, you must contact individual insurers. you may need to consider purchasing additional insurance. This coverage can be added to However, premium comparisons may help you to narrow your choice of insurers or your policy as an endorsement. agents you want to call. You can choose to insure your home and belongings for either replacement cost or actual cash value.These terms are explained below.

2 © 1993, 2006 National Association of Insurance Commissioners © 1993, 2006 National Association of Insurance Commissioners 7 Insurance Forms endorsement. exceptions.Nodeductibleapplies tothis note,etc.,again with certain promissory exceptions) iscovered bythis endorsement.Alsocovered ofanycheck,draft, istheforgery Coverage Endorsement Loss,theftorunauthorizeduseof credit cards (with certain endorsement applies only toformsHO-1,HO-2,HO-3andHO-4. motor vehicle,trailer orwatercraft are covered withoutproof offorcible entry. This As aresult ofthisendorsement, yourtheftprotection isbroadened. Thecontentsofyour Standard homeinsurance policies in aflood plain,your lender shouldrequire flood insurance. Just because your homeis not company canassist youwith application formsfor floodcoverage. If yourhome islocated Program.Some floodinsurance. Your insurance companiesalsooffer agentorinsurance home islocated, youmayqualify forfloodinsurance through theNationalFloodInsurance personal liabilityandmedicalpaymentscoverage onthem. Applicable tosmallsailboatsandoutboard motorboats, thisendorsementbroadens This endorsementincreases thecoverage onmoney, banknotes, securities,deeds,etc. summer home). Remember that these secondary residences aresummer home).Rememberthatthesesecondary residence (example: Homeowners coverageunderthisendorsement appliestoasecondary by the home insurance policy on your primary orprincipal residence. by thehomeinsurancepolicyonyourprimary endorsement, socheckwithyouragentorcompanyifyouare interested inpurchasing it. make sure youare adequately, butnotexcessively, insured. this Notallcompaniesoffer have thisendorsementonyourpolicy,you shouldcheckyourcoveragelimitsperiodically to policy period.Normally, the higherpremium isnotpaiduntilthetimeofrenewal.Even ifyou will allowyourinsurancecompanytoautomaticallychangepolicylimitduring the an“InflationGuardadequate level,somecompaniesoffer Endorsement.”Thisendorsement amount ofcoveragemaynotbeenoughinthefuture. To aidyouinkeepingcoverageatan isatleast80%ofyourhomereplacement cost,this of homeownersinsuranceyoucarry periodically increased tomaintainyourcoverageat 80%orhigher. Eventhoughtheamount If thereplacement costofyourhomeisincreasing withinflation,your policylimitsmustbe home insurancepolicy. There istypicallynodeductible appliedtothiscoverage. excluded perils.Itoftenprovides coveragethatisbroader granted inthe than thecover-age insured givesadescription ofthearticle andlists floateritemizeseacharticle, article items thatmayexceednormallimitsinyour regular homeinsurancepolicy. Apersonal covers possessionssuchasjewelry, furs,stamps,coins,guns,computers,antiquesandother floater.”This endorsementissometimescalleda“personalarticle floater Apersonalarticle • • • • • • • • 6 S F C I W T S I e n n l c r h c o f c a h e l e o o r a t d e f e e n d t t d i i r a d t o C c u I s a C n n r e l o r e a s a d v y G d u f r e t d u L r r R r P E a i a a e m F e n n r g s o r d c d i i e s r t d e o o s g E P e r e n n o n r s r a o d e n c y l t o m e e M P a r c P e s r n o o t n o r e d i n e t m o p m e D n e e y r e i n E s t p a y t e n o n s d E s d o E n i t S r n d o s e d d o r e c s o r o m u s r F r e n s e o i m e t n o r i m t t e g e s e n cover flood damage.Depending onwhere your e r n t y © 1993, 2006 National Association ofInsurance Commissioners t A Consumer’s GuidetoHomeInsurance A Consumer’s n o t automatically covered policy provides adequate coverage. home maydecrease overtime. inflation allincrease thereplacement costofyourhome,whiletheactualcash valueofthe to keeptrackofitsvalue. Forinstance,theadditionofaroom, newinsulation andyearly however, youmaywanttoconsider theoption. your belongingsatreplacement cost.Thepremium willbeslightlyhigherforthiscoverage; belongings) onanactual cashvaluebasis.Manyinsurers anoptionforyoutoinsure offer would beadepreciation fortheageandconditionofroof. after depreciation. Forexample,if yourroof hasa20-yearwarrantyandis17yearsold,there of atotalloss. wish toinsure at100%ofreplacement coverageintheevent costsoyouwillhave sufficient Checkwithyouragentorinsurancecompanytosee what isrequired.important. You may x $25,000loss=$18,750paidbythecompany. You wouldhavetopaythe balance:$6,250. damages baseduponthefollowingformula: of theloss.You wouldhavetopaythebalanceoutofpocket.Your companywouldpay for its replacement a $25,000loss,yourcompanywouldpayforonlypart value),andyousuffer $25,000. ofdamage,thenyourinsurancecompanywillpaythefull $25,000 worth it isinsured for$40,000(80%ofitsreplacement value),andafire causes losses. Forexample,ifitwouldcost$50,000toreplace yourhomeand atleast 80%ofthereplacement cost,apenaltyis appliedtopartial least 80%ofthereplacement cost.Ifthehomeowner failstoinsure for time itwasbuiltorpurchased becauseofageorwearandtear. quality,without deductingfordepreciation. your homeorrepair damageswithmaterialsofsimilarkindand Replacement CostorActualCashValue? GuidetoHomeInsurance A Consumer’s expenses ifyour homeisdamaged by aninsured event totheextent thatyou cannot live A © 1993, 2006 National Association ofInsurance Commissioners d d Check withyouragent orinsurancecompanyatleastoncea year tomakesure your Whether yourhomeis insured forreplacement valueoractualcashvalue,itisimportant Most standard homeinsurancepoliciescoverthecontents ofyourhome(i.e.,personal As youcansee,insuringyourhomefor at least80%ofitsreplacement costisvery Using thesefigures, yourcompany willonlypayfor75%ofyour$25,000loss.Hence,3/4 On theotherhand,ifyour$50,000homeisinsured for$30,000(whichisletsthan80%of Many insurers require homeowners toinsure theirhomesforat Depreciation isthedecrease inhomeorproperty valuesincethe Most home insurancepolicies provide additional livingexpenses thatwillpaysome A R i e c t p t i u o l a a n c l a e c l m a L s e h i n v t v i n a c l o g u s e E t is theamountitwouldtaketorepair orreplace damageto yourhome x is theamountitwouldtaketoreplace orrebuild p e muto nuac eesr =$40,000 Amount ofInsuranceNecessary Amount ofInsuranceCarried=$30,000 to coverassets(80%of$50,000) n s e s = 3/4or75% 3 Basic Coverages Available Insurance Forms more youwillpayforthepolicy. named perils.Themore perils your policycovers,the forms insure yourhomeandbelongingsagainstatleast11 HO-2, HO-3,HO-3withHO-15andHO-8. Thesepolicy owners ofsinglefamilyowneroccupiedhomes are HO-1, coverage provided willbesimilar. insurers usetheseexacttermstodescribetheirhome insurance forms;however, the insurance formsavailableforhomeowners, renters andcondominiumowners.Notall your homeandbelongingsare insured against.Thefollowing are descriptionsofthevarious Insurance Forms company todetermineiftheamountofmedical paymentscoverageissufficient. activities involvingyourat-homebusiness. You shouldcheckwithyouragentorinsurance payments donotapplytoyourinjuriesorthoseoffamilymemberslivingwithyou orto accidentally injured onyourproperty byamemberofyourfamilyorpets.Medical is sufficient. your agentorinsurancecompanytodetermineiftheamountofpersonalliabilitycoverage coverage appliestoyouandallfamilymemberswholivewithyou.You shouldcheckwith orproperty damagetootherscausedbyyournegligence.This business) bodilyinjury storage. order. Theseexpensescouldinclude limitedmotel,restaurant mealsandwarehouse there whilerepairs are beingmade,orifyouare deniedaccesstoyourhomebygovernment Home Insurance M P 4 e e r • The fivehomeownerspackageforms offered to An insuranceformisanothernameforan insurancepolicy, anditspecifieswhatperils Regardless ofwhoisatfault,thiscoveragepaysmedicalexpensesforpersons This coverageprotects youagainstaclaimorlawsuitresulting from (non-autoandnon- • coverage available, butisnotoffered byallcompanies.It usuallycostsmore. thatisnotspecifically excluded.This policygenerallyprovides thebroadesteverything • contents. home andbroad namedperilcoverage onyour This formprovides comprehensive coverage onyour abroadhomeowner's forms,offers rangeofcoverage. • on page12 the first11basicperils showninthechart • onpage12. chart homeowners forms. TheHO-8 provides buildingand personal property coverage slightly of homes that donotmeet allthe requirementsowner-occupants applicable toother d s o i c n B M C B S a a p a r o l o o l e s m P d i a c L c a i p d i f i a i r y a F e F l e m o b d o h F r i r e e l m m o C i n n t r o s y t m ( ( v i s H H v e e O O r ( a F - H - 2 g 1 o O ) e ) r covers the18perilslisted inthe - m insures yourproperty against 3 F ) o ( , themostpopular ofall r H m O - 3 ( H w O i t - 8 h ) H is designed to provide package coverage to the O - 1 1 © 1993, 2006 National Association ofInsurance Commissioners 5 ) coversyour homeandpersonal property for A Consumer’s GuidetoHomeInsurance A Consumer’s

Condominium Insurance Renters’ Insurance association policy. common properties. You havearighttoexaminethe walls andgrounds, includingliability associatedwith policy thatcoversthebuilding,includingany common if youwere ahomeowner. insuring yourpersonalpossessions.Liabilitycoverageprotects renters thesameasitwould specificperilsorlosses. be covered fordamageduetovery Extended CoverageoftencalledaDwellingFire Policy. yourhomeandonlywould youlimited coverageonyourhouse.ThismaybeFirecompany mayoffer and insurance andrenters’ insurance. individual unit-ownerpolicyissimilar tohome may purchase Unit-OwnersForm(HO-6).An or herownliabilitycoverage. or conditions thatapply. insurance agent todetermineifan additionalpremium isrequired andifthere are exclusions a monthly, oryearly basistokeepup withtheinflationrate. Checkwithyour quarterly and conditions ofthecompanyhis mayincludeincreasing the amountofyourinsurance on home. To rules obtainthistypeof coverage,youtypically mustmeetspecific underwriting Coverage Guaranteed replacement costcoverageisthemostcomplete coverageforyour • O G p u personal liabilityprotection. coverings, andanyaccessories notoriginallyinstalledinthe unit.Italsoprovides policy willalsopayfor property damagetopersonalbelongings, wall,floorandceiling property or tocoveranyitemsnotinsured bytheassociation's policy. Aunit-owner cover aunit-ownerwhowishestoinsure hisorher Your condominiumassociationshouldpurchase a If yourent orahouse,youare anapartment responsible forliabilitycoverageand Your homemaynotqualifyforoneofthefivehomeownerspackagepolicies;therefore, a suffered extensivedepreciation. a replacement well-suitedforresidences costclause.TheHO-8isparticularly thathave more restrictive thatinclude thanthatofotherhomeownersformsforowner-occupants To protect yourcontentsandinteriorwalls,you The owneroftheproperty isresponsible forinsuringthebuildingandobtaininghis • • expenses andincludespersonalliabilityprotection. 2). (Pleaseseepage12.)Likehomeinsurance, itprovides coverageforadditionalliving personal belongingsagainsttheperilsincluded inthehomeinsuranceBroad Form(HO- t i a o r n a C T a n e o t l n n e a d C e n o d o t m v s R e i e n F r p i o a u l r a g m m c e e s m U ( Y H n e o O n i t u t - - O 4 C ) M w , o n a s or arenter policy, insures yourhouseholdcontents and t e y r s W i F s o h r m t o ( C H o O n - 6 s i ) d e will r 5 Insurance Forms Insurance Forms more youwillpayforthepolicy. named perils.Themore perils your policycovers,the forms insure yourhomeandbelongingsagainstatleast11 HO-2, HO-3,HO-3withHO-15andHO-8. Thesepolicy owners ofsinglefamilyowneroccupiedhomes are HO-1, Home Insurance coverage provided willbesimilar. insurers usetheseexacttermstodescribetheirhome insurance forms;however, the insurance formsavailableforhomeowners, renters andcondominiumowners.Notall your homeandbelongingsare insured against.Thefollowing are descriptionsofthevarious Insurance Forms company todetermineiftheamountofmedical paymentscoverageissufficient. activities involvingyourat-homebusiness. You shouldcheckwithyouragentorinsurance payments donotapplytoyourinjuriesorthoseoffamilymemberslivingwithyou orto accidentally injured onyourproperty byamemberofyourfamilyorpets.Medical is sufficient. your agentorinsurancecompanytodetermineiftheamountofpersonalliabilitycoverage coverage appliestoyouandallfamilymemberswholivewithyou.You shouldcheckwith orproperty damagetootherscausedbyyournegligence.This business) bodilyinjury storage. order. Theseexpensescouldinclude limitedmotel,restaurant mealsandwarehouse there whilerepairs are beingmade,orifyouare deniedaccesstoyourhomebygovernment M P 4 e e r • The fivehomeownerspackageforms offered to An insuranceformisanothernameforan insurancepolicy, anditspecifieswhatperils Regardless ofwhoisatfault,thiscoveragepaysmedicalexpensesforpersons This coverageprotects youagainstaclaimorlawsuitresulting from (non-autoandnon- • coverage available, butisnotoffered byallcompanies.It usuallycostsmore. thatisnotspecifically excluded.This policygenerallyprovides thebroadesteverything • contents. home andbroad namedperilcoverage onyour This formprovides comprehensive coverage onyour abroadhomeowner's forms,offers rangeofcoverage. • on page12 the first11basicperils showninthechart • onpage12. chart homeowners forms. TheHO-8 provides buildingand personal property coverage slightly of homes that donotmeet allthe requirementsowner-occupants applicable toother d s o i c n B M C B S a a p a r o l o o l e s m P d i a c L c a i p d i f i a i r y a F e F l e m o b d o h F r i r e e l m m o C i n n t r o s y t m ( ( v i s H H v e e O O r ( a F - H - 2 g 1 o O ) e ) r covers the18perilslisted inthe - m insures yourproperty against 3 F ) o ( , themostpopular ofall r H m O - 3 ( H w O i t - 8 h ) H is designed to provide package coverage to the O - 1 1 © 1993, 2006 National Association ofInsurance Commissioners 5 ) coversyour homeandpersonal property for A Consumer’s GuidetoHomeInsurance A Consumer’s A Consumer’s GuidetoHomeInsurance A Consumer’s © 1993, 2006 National Association ofInsurance Commissioners insurance andrenters’ insurance. individual unit-ownerpolicyissimilar tohome may purchase Unit-OwnersForm(HO-6).An association policy. common properties. You havearighttoexaminethe walls andgrounds, includingliability associatedwith policy thatcoversthebuilding,includingany common Condominium Insurance or herownliabilitycoverage. if youwere ahomeowner. insuring yourpersonalpossessions.Liabilitycoverageprotects renters thesameasitwould Renters’ Insurance specificperilsorlosses. be covered fordamageduetovery Extended CoverageoftencalledaDwellingFire Policy. yourhomeandonlywould youlimited coverageonyourhouse.ThismaybeFirecompany mayoffer and or conditions thatapply. insurance agent todetermineifan additionalpremium isrequired andifthere are exclusions a monthly, oryearly basistokeepup withtheinflationrate. Checkwithyour quarterly and conditions ofthecompanyhis mayincludeincreasing the amountofyourinsurance on home. To rules obtainthistypeof coverage,youtypically mustmeetspecific underwriting Coverage Guaranteed replacement costcoverageisthemostcomplete coverageforyour • O G p u personal liabilityprotection. coverings, andanyaccessories notoriginallyinstalledinthe unit.Italsoprovides policy willalsopayfor property damagetopersonalbelongings, wall,floorandceiling property or tocoveranyitemsnotinsured bytheassociation's policy. Aunit-owner cover aunit-ownerwhowishestoinsure hisorher • To protect yourcontentsandinteriorwalls,you Your condominiumassociationshouldpurchase a • The owneroftheproperty isresponsible forinsuringthebuildingandobtaininghis If yourent orahouse,youare anapartment responsible forliabilitycoverageand Your homemaynotqualifyforoneofthefivehomeownerspackagepolicies;therefore, a suffered extensivedepreciation. a replacement well-suitedforresidences costclause.TheHO-8isparticularly thathave more restrictive thatinclude thanthatofotherhomeownersformsforowner-occupants expenses andincludespersonalliabilityprotection. 2). (Pleaseseepage12.)Likehomeinsurance, itprovides coverageforadditionalliving personal belongingsagainsttheperilsincluded inthehomeinsuranceBroad Form(HO- t i a o r n a C T a n e o t l n n e a d C e n o d o t m v s R e i e n F r p i o a u l r a g m m c e e s m U ( Y H n e o O n i t u t - - O 4 C ) M w , o n a s or arenter policy, insures yourhouseholdcontents and t e y r s W i F s o h r m t o ( C H o O n - 6 s i ) d e will r 5 Insurance Forms Insurance Forms endorsement. exceptions.Nodeductibleapplies tothis note,etc.,again with certain promissory exceptions) iscovered bythis endorsement.Alsocovered ofanycheck,draft, istheforgery Coverage Endorsement Loss,theftorunauthorizeduseof credit cards (with certain endorsement applies only toformsHO-1,HO-2,HO-3andHO-4. motor vehicle,trailer orwatercraft are covered withoutproof offorcible entry. This As aresult ofthisendorsement, yourtheftprotection isbroadened. Thecontentsofyour Standard homeinsurance policies in aflood plain,your lender shouldrequire flood insurance. Just because your homeis not company canassist youwith application formsfor floodcoverage. If yourhome islocated Program.Some floodinsurance. Your insurance companiesalsooffer agentorinsurance home islocated, youmayqualify forfloodinsurance through theNationalFloodInsurance personal liabilityandmedicalpaymentscoverage onthem. Applicable tosmallsailboatsandoutboard motorboats, thisendorsementbroadens This endorsementincreases thecoverage onmoney, banknotes, securities,deeds,etc. summer home). Remember that these secondary residences aresummer home).Rememberthatthesesecondary residence (example: Homeowners coverageunderthisendorsement appliestoasecondary by the home insurance policy on your primary orprincipal residence. by thehomeinsurancepolicyonyourprimary endorsement, socheckwithyouragentorcompanyifyouare interested inpurchasing it. make sure youare adequately, butnotexcessively, insured. this Notallcompaniesoffer have thisendorsementonyourpolicy,you shouldcheckyourcoveragelimitsperiodically to policy period.Normally, the higherpremium isnotpaiduntilthetimeofrenewal.Even ifyou will allowyourinsurancecompanytoautomaticallychangepolicylimitduring the an“InflationGuardadequate level,somecompaniesoffer Endorsement.”Thisendorsement amount ofcoveragemaynotbeenoughinthefuture. To aidyouinkeepingcoverageatan isatleast80%ofyourhomereplacement cost,this of homeownersinsuranceyoucarry periodically increased tomaintainyourcoverageat 80%orhigher. Eventhoughtheamount If thereplacement costofyourhomeisincreasing withinflation,your policylimitsmustbe home insurancepolicy. There istypicallynodeductible appliedtothiscoverage. excluded perils.Itoftenprovides coveragethatisbroader granted inthe than thecover-age insured givesadescription ofthearticle andlists floateritemizeseacharticle, article items thatmayexceednormallimitsinyour regular homeinsurancepolicy. Apersonal covers possessionssuchasjewelry, furs,stamps,coins,guns,computers,antiquesandother floater.”This endorsementissometimescalleda“personalarticle floater Apersonalarticle • • • • • • • • 6 S F C I W T S I e n n l c r h c o f c a h e l e o o r a t d e f e e n d t t d i i r a d t o C c u I s a C n n r e l o r e a s a d v y G d u f r e t d u L r r R r P E a i a a e m F e n n r g s o r d c d i i e s r t d e o o s g E P e r e n n o n r s r a o d e n c y l t o m e e M P a r c P e s r n o o t n o r e d i n e t m o p m e D n e e y r e i n E s t p a y t e n o n s d E s d o E n i t S r n d o s e d d o r e c s o r o m u s r F r e n s e o i m e t n o r i m t t e g e s e n cover flood damage.Depending onwhere your e r n t y © 1993, 2006 National Association ofInsurance Commissioners t A Consumer’s GuidetoHomeInsurance A Consumer’s n o t automatically covered would beadepreciation fortheageandconditionofroof. after depreciation. Forexample,if yourroof hasa20-yearwarrantyandis17yearsold,there however, youmaywanttoconsider theoption. your belongingsatreplacement cost.Thepremium willbeslightlyhigherforthiscoverage; belongings) onanactual cashvaluebasis.Manyinsurers anoptionforyoutoinsure offer home maydecrease overtime. inflation allincrease thereplacement costofyourhome,whiletheactualcash valueofthe to keeptrackofitsvalue. Forinstance,theadditionofaroom, newinsulation andyearly policy provides adequate coverage. quality,without deductingfordepreciation. your homeorrepair damageswithmaterialsofsimilarkindand time itwasbuiltorpurchased becauseofageorwearandtear. $25,000. ofdamage,thenyourinsurancecompanywillpaythefull $25,000 worth it isinsured for$40,000(80%ofitsreplacement value),andafire causes losses. Forexample,ifitwouldcost$50,000toreplace yourhomeand atleast 80%ofthereplacement cost,apenaltyis appliedtopartial least 80%ofthereplacement cost.Ifthehomeowner failstoinsure for damages baseduponthefollowingformula: of theloss.You wouldhavetopaythebalanceoutofpocket.Your companywouldpay for its replacement a $25,000loss,yourcompanywouldpayforonlypart value),andyousuffer x $25,000loss=$18,750paidbythecompany. You wouldhavetopaythe balance:$6,250. of atotalloss. wish toinsure at100%ofreplacement coverageintheevent costsoyouwillhave sufficient Checkwithyouragentorinsurancecompanytosee what isrequired.important. You may Replacement CostorActualCashValue? GuidetoHomeInsurance A Consumer’s expenses ifyour homeisdamaged by aninsured event totheextent thatyou cannot live A © 1993, 2006 National Association ofInsurance Commissioners d d Most standard homeinsurancepoliciescoverthecontents ofyourhome(i.e.,personal Whether yourhomeis insured forreplacement valueoractualcashvalue,itisimportant Check withyouragent orinsurancecompanyatleastoncea year tomakesure your Depreciation isthedecrease inhomeorproperty valuesincethe Many insurers require homeowners toinsure theirhomesforat On theotherhand,ifyour$50,000homeisinsured for$30,000(whichisletsthan80%of Using thesefigures, yourcompany willonlypayfor75%ofyour$25,000loss.Hence,3/4 As youcansee,insuringyourhomefor at least80%ofitsreplacement costisvery Most home insurancepolicies provide additional livingexpenses thatwillpaysome A R i e c t p t i u o l a a n c l a e c l m a L s e h i n v t v i n a c l o g u s e E t is theamountitwouldtaketorepair orreplace damageto yourhome x is theamountitwouldtaketoreplace orrebuild p e muto nuac eesr =$40,000 Amount ofInsuranceNecessary Amount ofInsuranceCarried=$30,000 to coverassets(80%of$50,000) n s e s = 3/4or75% 3 Basic Coverages Available A Consumer’s Guide to Home Insurance A Consumer’s Guide to Home Insurance in a designated flood plain don't assume you will never incur flood damage or that you • Amount of Coverage: The amount of coverage you buy for your house, contents and are not eligible for flood insurance. For more information about federal flood insurance, personal liability will affect the price you pay. contact the National Flood Insurance Program at 1-800-638-6620. • Deductible Amount: Your choice of a higher deductible will reduce the price for home insurance. • Earthquake Insurance • Discounts: In some states, insurers offer lower prices for such things as insuring your Earthquake insurance is available through most insurance companies at an additional home and car with the same company and installing dead-bolt locks or alarm systems. cost. It is normally issued as an endorsement and attached to your home insurance • Credit Reports: In many states, insurers use your credit history as a factor in policy. If you live in California, coverage is available from the California Earthquake considering whether to sell you insurance and determine what price you will be charged. Authority. • Windstorm Coverage What Deductible Should I Choose? Most home insurance policies cover damage caused by windstorm and hail. However, in • The deductible applies only to coverage on your house and personal property. It is some areas of certain states, mostly coastal, this coverage is excluded from the standard the amount you have to pay out of pocket on each claim. policy. For more information, ask your insurance agent or insurance company if this • A policy with $100 deductible will cost more than one with $250 deductible. Higher peris covered by your policy. deductibles may be available at a reduced price. Basic Coverages Available Smart Shopping Whether you own or rent, there are different packages of home insurance offered to The key to comparison shopping is to know what insurance coverages you need protect your home and belongings. Each package protects against a specified number of before you start and then to find out how much those coverages will cost from a number perils. Perils are events that cause damage to property. Three examples are fire, windstorm of insurers. Comparison shopping takes time but will save you money. and theft. In addition to coverage for named perils, each package policy usually contains Different companies charge different rates for the same coverage. No one wants to pay four additional types of coverage: property damage, additional living expenses, personal more for their home insurance than they absolutely have to. The only way you can make liability and medical payments. Home insurance policies apply to most owner occupied certain you are not paying too much is to shop around. Find out what different insurers single-family homes, and are modified slightly for apartments and condominiums. charge or identical products and services.

2 © 1993, 2006 National Association of Insurance Commissioners © 1993, 2006 National Association of Insurance Commissioners 7 8 Insurance Forms coverage they need.Insurance agentsare paidonacommission basis. theyhavereceived fromwhat kindof claimservice thecompanies theyrecommend. askthem agents. Ask themabouttheirexperience regarding Inparticular priceandservice. your neighbors,relatives andfriendsforrecommendations oninsurancecompanies and forcompanies andagentsinyourarea.pages ofthetelephone directory Inaddition,contact insurance companies markettheirproducts. toShop Where c o m Consumers oftenrely ontheirinsurance agentorcompany totellthemwhatkind of Checkthenewspaperandyellow Most insurancecompanies andmanyagentsadvertise. When youbegintocontact insurers, there are anewthingsyoushouldknowabouthow p e t i t i o n o n l y w o r k s i f t h e c o n s u m e r s h o © 1993, 2006 National Association ofInsurance Commissioners p s f o r c o v e r A Consumer’s GuidetoHomeInsurance A Consumer’s a g e . R e m e m b e r , A Consumer’s GuidetoHomeInsurance A Consumer’s Commonly AskedQuestions more detailaboutspecialconditionsofprograms inyourstate. to meetspecialneedsincludingavailability. for Contactyourstatesinsurancedepartment of fire andextendedcoverages.Itdoesnotaddress thestatespecialprograms established coverages foundina“home-owners”policy. Itdoesnotaddress themore limitedofferings and property coverages.TheConsumerGuideprincipallyaddresses thepackageof and makeyourowndecisions. best valueforyourmoney, youmusttakeresponsibility foryourhomeinsurancepurchase yourlendermayrequiremortgaged, the purchase ofinsuranceonyourhome.To getthe increase thevalueyoureceive. information onhowtomakedecisionsthatcanlowerthecostofyourhomeinsurance and W H © 1993, 2006 National Association ofInsurance Commissioners o h w replacement costprotection (seepage 4). your local fire determineyour fire department protection class. • • a limitedformofcoverage. oldhomesor offer companies eithermaynotinsure very • The coveragesoffered tohomeownersare typicallycontainedinapackageofliability Although homeinsuranceisnotrequired bylawinmoststates, ifyourhomeis Home insuranceisanexpensivepurchase formanyAmericans.Thisguide provides • recommended byyourlender. individual circumstances.You are notrequired topurchase insurancefrom theinsurer Thismaybeeither toolittleormuchcoverageforyour the amountofmortgage. place torebuild theirhomeifitis destroyed. coveragein your ownpocketifdisasterstrikes.Mostpeople willwanttohavesufficient lawsuits resulting from yournegligence. • • • a t M A A P L T P L L u f o e e r o f y g c e o n g c e p l h c i p a a d c e o t l H l e e y s f o r S r F o H H t f e i m y R R r o C o l e f e e u e P m o q q P P s r n I e u u e e o r n r s o i o i : Newhomes mayqualifyfordiscounts insomestates. Someinsurance t s t I r r e n t r u t e e e u e c s r m m c c t c u a i t t t e e r n o e i i i a o n o n o n c n n t e n: Your home’s distancefrom afire hydrantand thequalityof t n : Thebetteryourcoverage,thelessyouwill havetopayoutof s s c : You needenoughliabilitycoveragetoprotect yourselffrom : Framehouses usuallycostmore toinsure thanbrick. D : Your lendermayrequire youtocoverthehouseforatleast : Insurers mayimposesomecoverage requirements for other peopleordamagetheirproperty. Everyone property. Tenants Owners Why BuyHomeInsurance? e o P r I i N c e e s e : toprotect bothyourhouseandpersonalproperty. : toprotect yourfurniture andotherpersonal ? d : protection againstliabilityforaccidents thatinjure ? 1 Introduction A Consumer’s GuidetoHomeInsurance A Consumer’s premiums. ofthatsavings ispassedalongtotheconsumerinlower company andoftena portion commissions forrenewal business,canrepresent significantcostsavingstothe insurance product overanothercompany's product. Thelowercommissionstructure,especially on agents. Thisisbecause companiesdonothavetogivetheagent anincentivetowritetheir quote from onecompanyforeach exclusiveagentthatyoutalkto. youcoveragefromcan onlyoffer thecompanytheyrepresent; therefore, youcanonlygeta company. Thesecompaniescalltheiragentsan consumers. for more thanonecompanyfrom oneagent.Thisisconsidered anadvantagetomany in theirpurchase decision. consumers shouldbeaware ofeachthethree methods and maywanttoconsiderthem may begoodorbadforaconsumer, offered. Therefore, dependingonthetype ofservices direct marketing, independentagentsorexclusiveagents.Thetypeofmarketingmethod product. Insurancecompaniesgenerallyuseoneofthree methods tomarkettheirproduct: should understandthatnotallinsurance companiesuseinsuranceagentstoselltheir information: that youprovide thesameinformationtoeachagentorcompany. comparison ofdifferent companies’products. Whenaskingforpricequotations,itiscrucial Price Quotations Before signing an application forany insurance coverage, callyour state insurance company, there are yougetyourmoney's worth. stepsyou cantaketomakecertain For Your Protection represent. additional premium tohavealocalagentavailablethem. fortheopportunity along someofthesesavingstotheconsumer. However, someconsumers prefer topayan do nothavetopayinsuranceagentscommissions toselltheirpolicies.Companiescanpass In somecases,consumerscansavemoney withdirect marketersbecausethesecompanies © 1993, 2006 National Association ofInsurance Commissioners Sometimes exclusive agents mayworkforalowerrateofcommission thanindependent Some insurancecompaniessellcoverage through agentsthatonlyrepresent their This information is necessary totheratingprocess describedearlierinthisguide.YouThis informationisnecessary • limitsyouwant. • thecoverages;and • apicture ofyourhome; • securitydevices; • square footage; • distancefrom thenearest fire andfire department hydrant; • descriptionofyourhouse; To giveyouanaccuratequotetheagentorcompanywillusuallyrequest thefollowing When shoppingforhomeinsurance,premium quotationsare ausefultoolfor Once youhave selectedtheinsurance coveragesyou needandaninsurance agentor If youdecidetocallagentsforquotations, askthemhowmanycompaniesthey D i r e c t m I a n r d k e e p t e e r n s d e sell insuranceovertheInternet,through themainlandbytelephone. n t a g e n t s represent severalcompanies;therefore,you cangetquotes e x c l u s i v e a g e n c y f o r c e . Exclusive agents

9 Insurance Forms A Consumer’s Guide to Home Insurance A Consumer’s Guide to Home Insurance department and verify that the company and the agent you are dealing with are licensed Table of Contents in your state. It is illegal for unlicensed insurers to sell insurance. Business cards are not proof of a licensed insurance agent or company. If you do business with an unlicensed agent or company, you have no guarantee that the coverage you pay for will ever be honored. If you purchase insurance from companies not legally doing business within your state, you will not be protected by the guaranty fund should the company fail. Introduction 1 Every state has a safety net to protect insurance consumers from financial loss in the Commonly Asked Questions 1 rare instance that a company becomes insolvent. This safety net is called a “guaranty How Much Home Insurance Do I Need? 1 fund.” The guaranty funds are established by state law and are composed of licensed What Affects Home Insurance Prices? 1 companies in the state. They pay the claims of policyholders and other claimants of an What Deductible Should I Choose? 2 insolvent company. The money to pay the claims against the insurance company comes from assessments made against all of the insurance companies that are members of the Basic Coverages Available 2 guaranty fund. Property Damage 2 If you are contacted by an unlicensed agent or company, call your state insurance Additional Living Expenses 3 department immediately so that regulatory action can be taken.By doing so, you may Personal Liability 4 protect someone less knowledgeable than you from being victimized. Medical Payments 4 You should be aware that a home insurance policy is a legal contract. It is written so that your rights and responsibilities as well as those of the insurance company are Insurance Forms 4 clearly stated. When you purchase home insurance, you will receive a policy. You Home Insurance 4 should read that policy and make certain you understand its contents. If you have Renters’ Insurance (HO-4) 5 questions about your insurance policy, contact your insurance agent or company for Condominium Insurance (HO-6) 5 clarification. Keep your policy in a safe place and know the name of your insurer. If you Optional Coverages You May Wish to Consider 5 still have questions, call your state insurance department. Smart Shopping 7 Seek Unbiased Information 7 Your State Insurance Department Loss Chart 8 Your state insurance department exists to serve you. Where to Shop 8 State insurance departments can be a source of unbiased Price Quotations 9 information and assistance to you. For Your Protection 9 State insurance departments regularly publish written information valuable to the home insurance consumer. They Your State Insurance Department 10 may have additional consumer guides that outline your specific rights and responsibilities under your state’s List of State Insurance Departments 11 insurance laws and regulations. They also may publish premium comparison reports for your use in shopping for insurance. If you do not understand your insurance policy,

10 © 1993, 2006 National Association of Insurance Commissioners © 1993, 2006 National Association of Insurance Commissioners www.ct.gov/cid (890) 297-3800 06142-0816 Hartford, CT P.O. Box816 Department of Insurance Connecticut www.dora.state.co.us/insurance (303) 894-7499 Denver, CO80202 1560 Broadway, Suite850 Department ofRegulatory Agencies Colorado www.insurance.ca/gov (916) 492-3500 95814 Sacramento, CA 300 CapitolMall,Suite1700 Department ofInsurance California www.insurance.arkansas.gov (501) 371-2600 Little Rock, AR 72201-1904 1200 W. 3rdSt. Department ofInsurance Arkansas www.id.state.az.us (602) 364-3100 85018-7256 Phoenix, AZ 2910 N.44thSt, Suite210 Department ofInsurance Arizona 011 (684)633-4116 Pago, American Samoa96799 Executive Office Building American Samoa www.commerce.state.ak.us/insurance/ (907) 269-7900 99501-3567 Anchorage, AK 550 W. 7th Ave, Suite1560 Economic Development Department ofCommunityand Alaska www.aldoi.gov (334) 269-3550 36130-3351 Montgomery, AL P.O. Box303351 Department ofInsurance Alabama A Consumer’s GuidetoHomeInsurance A Consumer’s © 1993, 2006 National Association of Insurance Commissioners List ofStateInsuranceDepartments www.doi.idaho.gov (208) 334-4250 83720-0043 Boise, ID Box83720 P.O. Department of Insurance Idaho www.hawaii.gov/dcaa/ins (808) 586-2790 Honolulu, HI96811-3614 P.O. Box3614 Consumer Affairs Department ofCommerceand Hawaii 011 (671)475-1823 GMF, Guam96921 P.O. Box23607 Government ofGuam Department ofInsurance Guam www.gainsurance.org (404) 656-2056 30334 Atlanta, GA 704 W. Tower Floyd MemorialBuilding 2 MartinLutherKingJr. Dr. Department ofInsurance Georgia www.fldfs.com (850) 413-2850 32399-0301 FL Tallahassee, 200 EastGainesSt. The LarsonBuilding Office oftheChiefFinancialOfficer Services Florida DepartmentofFinancial Florida www.disb.dc.gov (202) 727-8000 Washington, DC20002 810 FirstSt N.E.,Suite701 Columbia Government oftheDistrict and Banking Department ofInsurance,Securities District ofColumbia www.state.de.us.inscom/default.html (302) 674-7300 Dover, DE19904 841 SilverLakeBlvd. Rodney Building Department ofInsurance Delaware www.mdinsurance.state.md.us (410) 468-2000 Baltimore, MD21202-2272 525 Saint PaulPlace Department of Insurance Maryland www.maineinsurancereg.org (207) 624-8475 04333-0034 Augusta, ME 34 State HouseStation Financial Regulation Department ofProfessionaland Maine www.ldi.state.la.us (225) 342-5423 70804-9214 Baton Rouge,LA P.O. Box94214 Department ofInsurance Louisiana www.doi.ppr.ky.gov/kentucky/ (800) 595-6053(toll-free) (502) 564-6027 40602-0517 Frankfort, KY P.O. Box517 Commonwealth ofKentucky Department ofInsurance Kentucky www.ksinsurance.org (785) 296-3071 Topeka, KS66212-1678 420 S.W. 9thSt. Department ofInsurance Kansas www.idd.state.ia.us (515) 281-5705 50319-0065 Des Moines,IA 330 E.MapleSt. Department ofInsurance Iowa www.in.gov.idoi (317) 232-2385 Indianapolis, IN46204-2787 311 W. Washington St, Suite300 Department ofInsurance Indiana www.ins.state.il.us (312) 814-2427 62767-0001 Springfield, IL 320 W. Washington St, 4thFlr Department ofInsurance Illinois 11 State Departments State Departments 12 www.doi.state.nv.us (800) 992-0900 (toll-free) (775) 687-4270 89701-5491 Carson City, NV 788 FairviewDr, Suite300 Department of Insurance Nevada www.doi.ne.gov (402) 471-2201 68508 Lincoln, NE St, Suite400 941 ‘O’ Terminal Building Department ofInsurance Nebraska www.sao.mt.gov (800) 332-6148(toll-free) (406) 444-2040 59601 Helena, MT 840 Helena Ave Office State Auditor’s Montana www.insurance.mo.gov (800) 726-4390(toll-free) (573) 751-4126 Jefferson City, MO65102-0690 P.O. Box690 Department ofInsurance Missouri www.doi.state.ms.us (800) 562-2957(toll-free) (601) 359-3569 Jackson, MS39205 P.O. Box79 Department ofInsurance Mississippi www.commerce.state.mn.us (651) 296-4026 St. Paul,MN55101-2198 85 7thPlaceEast,Suite500 Department ofCommerce Minnesota www.michigan.gov/ofis (toll-free) (877) 999-6442 (517) 335-3167 Lansing, MI48909-7720 P.O. Box30220 Services Office ofFinancial andInsurance Michigan www.state.ma.us/doi (617) 521-7794 02110-2208 Boston, MA One SouthStation, 5thFlr Department ofInsurance Massachusetts w (212) 480-2289 10004-2319 New York,NY 25 BeaverSt. Department ofInsurance New York www.nmprc.state.nm.us/inshm.htm (800) 947-4722(toll-free) (505) 827-4601 Sante Fe,NewMexico87504-1269 P.O. Box1269 Department ofInsurance New Mexico www.njdobi.org (toll-free) (800) 446-SHOP (609) 292-5360 08625-0325 Trenton, NJ P.O. Box325 20 W. State St. Department ofBankingandInsurance New Jersey www.nh.gov/insurance (800) 852-3416(toll-free) (603) 271-2261 03301 Concord, NH 21 FruitSt, Suite14 Department ofInsurance New Hampshire www.oid.state.ok.us (800) 522-0071 (toll-free) (405) 521-2828 Oklahoma City, OK73152-3408 P.O. Box53408 Department of Insurance Oklahoma www.ohioinsurance.gov (614) 644-2658 43215-1067 Columbus, OH 2100 Stella Ct. Department ofInsurance Ohio www.state.nd.us/ndins (800) 247-0560(toll-free) (701) 328-2440 58505-0320 Bismarck, ND 600 E.Blvd Ave, 5thFlr Department ofInsurance North Dakota www.ncdoi.com (800) 662-7777(toll-free) (919) 733-3058 27699-1201 Raleigh, NC 1201 MailServiceCenter Department ofInsurance North Carolina ww.ins.state.ny.us © 1993, 2006 National Association of Insurance Commissioners A Consumer’s GuidetoHomeInsurance A Consumer’s www.tdi.state.tx.us (800) 578-4677 (512) 463-6469 78714-9104 Austin, TX P.O. Box149104 Department of Insurance Texas www.state.tn.us/commerce (800) 342-4029 (615) 741-2241 37243-0565 Nashville, TN 500 JamesRobertsonParkway Davey Crockett Tower, 5thFlr Department ofCommerceand Insurance Tennessee www.state.sd.us/drr (605) 773-3563 Pierre, SouthDakota57501-3185 445 E.Capitol Ave Department ofRevenueandRegulation South Dakota www.doi.state.sc.us (803) 737-6212 29202-3105 Columbia, SC P.O. Box100105 Department ofInsurance South Carolina www.dbr.state.ri.us (401) 222-2223 Providence, RI02903-4233 233 RichmondSt, Suite233 Department ofBusinessRegulation Rhode Island www.ocs.gobierno.pr (787) 722-8686 San Juan,PuertoRico00910-8330 Fernandez JuncosStation P.O. Box8330 Department ofInsurance Puerto Rico www.insurance.state.pa.us (717) 783-0442 17120 Harrisburg, PA 1326 Strawberry Square Department ofInsurance Pennsylvania www.oregoninsurance.org (800) 877-4894(toll-free) (503) 947-7980 Salem, OR97309-0405 P.O. Box14480 Department ofInsurance Oregon National AssociationofInsuranceCommissioners if theseNAICmodelshavebeenenactedin yourstate. term care insurance.You tofindout may check withyourstateinsurancedepartment you willfindseveralreferences tosuchNAICmodellawsorregulations related tolong- meet theneedsoftheirmarketplaceandconsumers.Asyouread through thisguide, states’ use.Statesthatchoosetodosomayadoptthemodelsintactormodifythem to this through aseriesofmodellaws,regulations andguidelines,developedforthe for thedevelopmentofuniformpublicpolicywhenuniformityisappropriate. Itdoes protecting consumers. guide isoneexampleofworkdonebytheNAICtoassiststatesineducatingand and theNAIChelpsregulators fulfillthatobligationinanumberofdifferent ways.This responsibility ofthestateregulators istoprotect theinterests ofinsurance consumers, regulators inall50states,theDistrictofColumbiaandfiveU.S.territories.Theprimary Itsmembersconsistofthechiefinsurance association ofstategovernmentofficials. About theNAIC… www.naic.org Fax 816-783-8175 (816)-842-3600 City,Kansas MO64108-2604 Suite 800 2301 McGeeStreet Another way the NAIC lends support tostateregulatorsAnother waytheNAIClendssupport isbyproviding aforum The NationalAssociationofInsuranceCommissioners(NAIC)istheoldest A Consumer’s Guide to Home Insurance

A Consumer’s GuidetoHomeInsurance A Consumer’s premiums. ofthatsavings ispassedalongtotheconsumerinlower company andoftena portion commissions forrenewal business,canrepresent significantcostsavingstothe insurance product overanothercompany's product. Thelowercommissionstructure,especially on agents. Thisisbecause companiesdonothavetogivetheagent anincentivetowritetheir quote from onecompanyforeach exclusiveagentthatyoutalkto. youcoveragefromcan onlyoffer thecompanytheyrepresent; therefore, youcanonlygeta company. Thesecompaniescalltheiragentsan consumers. for more thanonecompanyfrom oneagent.Thisisconsidered anadvantagetomany in theirpurchase decision. consumers shouldbeaware ofeachthethree methods and maywanttoconsiderthem may begoodorbadforaconsumer, offered. Therefore, dependingonthetype ofservices direct marketing, independentagentsorexclusiveagents.Thetypeofmarketingmethod product. Insurancecompaniesgenerallyuseoneofthree methods tomarkettheirproduct: should understandthatnotallinsurance companiesuseinsuranceagentstoselltheir information: that youprovide thesameinformationtoeachagentorcompany. comparison ofdifferent companies’products. Whenaskingforpricequotations,itiscrucial Price Quotations Before signing an application forany insurance coverage, callyour state insurance company, there are yougetyourmoney's worth. stepsyou cantaketomakecertain For Your Protection represent. additional premium tohavealocalagentavailablethem. fortheopportunity along someofthesesavingstotheconsumer. However, someconsumers prefer topayan do nothavetopayinsuranceagentscommissions toselltheirpolicies.Companiescanpass In somecases,consumerscansavemoney withdirect marketersbecausethesecompanies © 1993, 2006 National Association ofInsurance Commissioners Sometimes exclusive agents mayworkforalowerrateofcommission thanindependent Some insurancecompaniessellcoverage through agentsthatonlyrepresent their This information is necessary totheratingprocess describedearlierinthisguide.YouThis informationisnecessary • limitsyouwant. • thecoverages;and • apicture ofyourhome; • securitydevices; • square footage; • distancefrom thenearest fire andfire department hydrant; • descriptionofyourhouse; To giveyouanaccuratequotetheagentorcompanywillusuallyrequest thefollowing When shoppingforhomeinsurance,premium quotationsare ausefultoolfor Once youhave selectedtheinsurance coveragesyou needandaninsurance agentor If youdecidetocallagentsforquotations, askthemhowmanycompaniesthey D i r e c t m I a n r d k e e p t e e r n s d e sell insuranceovertheInternet,through themainlandbytelephone. n t a g e n t s represent severalcompanies;therefore,you cangetquotes e x c l u s i v e a g e n c y f o r c e . Exclusive agents

9 Insurance Forms Consumer’s Guide

9/06