Home Insurance Basics

We feel protective of where we live and attached to what's inside. Your local agent can help put you on the road to finding the right coverage. But in the meantime, it doesn't hurt to know a few facts.

What is home insurance? Say your home is burglarized or struck by lightening. Homeowners insurance - sometimes called home insurance or property insurance - could compensate you for your loss. It could replace your stuff, make repairs, or help you rebuild completely.

What does it include? Homeowners insurance can cover both damage to your property and legal responsibility you might have for any injuries and property damage you, your family - or even a pet - might cause to others.

What is an endorsement?  It's an amendment or addition to an existing policy that changes the term or scope of the policy. It's sometimes called a "rider."

What is usually covered by home insurance? A standard policy usually covers these four key things:

  1. PROPERTY (DWELLING AND OTHER STRUCTURES) This part of a policy is designed to pay to repair or rebuild a home and even structures not physically attached to your home (such as sheds or garages) if they are damaged by a peril listed in the policy. (A peril is defined as the cause of a loss.) This may also include damage to fixtures such as plumbing, wiring, and heating.
  2. PERSONAL PROPERTY Furniture, clothes, and other personal items are usually covered if they are stolen or destroyed by certain types of perils. Most companies provide coverage limits of 50 to 70 percent of the amount of insurance on the structure of the home.What's more, your belongings could be covered anywhere in the world. Pricey  items such as jewelry, antiques, and guns, are typically covered, but there's usually a dollar limit if those things are stolen. You can also buy an endorsement  for specific, high-dollar items.
  3. LIABILITY PROTECTION Liability coverage helps protect you and your family from claims and lawsuits filed by other people. This clause could also include your pets. That means if your dog decides to nibble on the leg of the woman next door, your insurer could help pay the woman's doctor bills, whether it happened on your property or hers. The liability portion of the policy pays for both the cost of defending you in court and most court awards up to the limit of the policy.
  4. ADDITIONAL LIVING EXPENSES If your house is destroyed by a fire, storm, or other insured peril, this could help pay the costs of living somewhere else until your house is livable. It may cover hotel bills, restaurant meals, and other living expenses. Coverage for additional costs differs from company to company, so double-check the limits before booking that fancy-pants resort suite in Fiji.

What are the perils that a homeowner's policy typically covers? 

- Under a basic form -

  • Fire
  • Lightening
  • Windstorm
  • Hail
  • Explosion
  • Smoke
  • Vandalism
  • Theft
  • Glass

Common gaps in homeowners insurance: Homeowners policies may vary and homeowners can mistakenly assume common items and features are covered. When purchasing insurance coverage, talk with your insurance agent about your needs and be sure to mention the following items:

  • Sump pumps
  • Sheds and unattached enclosures
  • Trampolines and pools
  • Jewelry, artwork, antiques (Depending on the value, you might want to consider adding an additional personal articles policy.)
  • Home office or business (You will need an additional policy to protect your assets if a client is injured on your property or if merchandise is damaged or stolen.)

It pays to be proactive:  When reviewing your policy options, considering the following factors can help guide you to the appropriate amount of coverage for your needs.

  1. DETERMINING ADEQUATE COVERAGE Creating a home inventory can help determine if you have enough coverage. If you have any special items like art, jewelry, consider if you need additional coverage. You also need to factor in coverage for a shed or pool. Those items might not be covered under your policy or might raise your liability.
  2. ACTUAL CASH VALUE VS. REPLACEMENT COSTS With "Replacement Cost" the insurance company will pay you the "Actual Cash Value" upfront, then provide further reimbursement if the cost of replacement is more than the actual cash value.In cases where there is a disagreement between you and the insurance company over the amount of the loss, Minnesota statute provides for resolving the dispute through an appraisal process. Ask your claim representative how to start the appraisal process.If your policy provides "Actual Cash Value" the insurance company will pay you an amount equivalent to the current value of the property. Keep in mind, that you may be reimbursed for less than what you originally paid for the item.
  3. RAISING YOUR DEDUCTIBLE TO LOWER PREMIUM COSTS Ask your insurance agent whether there are discounts you qualify for and review if you could raise your deductible to decrease your premium costs.
  4. DETERMINING YOUR LIABILITY COVERAGE Coverage for $250,000 might sound like it would go a long way to protect your property, but once you factor in retirement accounts, savings, and your home's value you might need coverage beyond that amount.
  5. REVIEW YOUR COVERAGE ANNUALLY Insurance companies may change policy terms at renewal, but they must notify you first. Read all notices and information sent from your insurance company.
  6. PREPARE HOME INVENTORY A home inventory can help in case you need to file an insurance claim after your belonging are damaged or stolen. Not only will an accurate and detailed inventory make the claims process easier, it can help ensure that you are adequately compensated. These tips can help you put together a comprehensive home inventory:

Document each item as completely as possible, including brand, serial number, and model number. Taking pictures can help.

Keep receipts to prove what you paid for each item.

Review your insurance policy to know what is covered and whether your possessions are insured for actual cash value or replacement cost.

For rare or valuable items such as jewelry, antiques, or art, you may want to consider adding additional insurance -- a rider -- to your policy.

Update the list annually and keep it in a safe, fire-proof box, or store in online.

Sources: Grinnellmutual.com and mn.gov

The summarized coverage descriptions are used for reference only and do not contain relevant policy conditions, exclusions, or limitations. Products and discounts not available to all persons in all states are subject to underwriting guidelines, review, and approval.


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