Understanding Homeowners Insurance

There are three components to a basic homeowners policy:

1. Dwelling Coverage
This provides for the rebuilding of your home (or any part of it) in the event it is damaged or destroyed. It is recommended that you insure your home for what it would cost to actually rebuild it, not its current market value. Your insurer will use a formula-based on the features of your home, construction costs, etc. - to determine what its rebuilding cost would be. It is important that this value be kept up-to-date, and takes into account any remodeling or home improvements, so that you have replacement coverage in the event of a loss.

2. Contents Coverage
This provides for the replacement of all personal belongings in the event of theft, destruction or other type of loss. The amount of contents coverage provided will typically be limited to a percentage of the overall dwelling replacement value, or will be provided as part of a "blanket" amount that includes coverage for both dwelling and contents. Since there are limits on how much coverage will be provided for individual luxury items such as jewelry, fine art and other valuables, you may want to specifically list or "schedule" these items - and pay additional premium to do so - to assure each specific item is insured for its replacement value.

3. Liability Coverage
This provides coverage for bodily injuries in the event someone outside your household is injured on your property, or if you become liable for someone else's injuries (not related to an auto accident) in a situation away from your home. Typically, you can buy liability limits that range from $100,000 to $500,000 as part of a basic homeowners policy. For increased liability protection–which will provide higher limits and broader protection, including auto-related liability claims–you should seriously consider Umbrella Liability Coverage.

Special features to consider Many policies provide features - with varying coverage limits - which you will find to be very beneficial. A few of the most common features are listed below as a guide to the types of coverages you should be inquiring about.

• Detached structures
  Other structures on your property which are detached from your house are typically insured at 10% of the dwelling limit or are included in the blanket limit. If you have any large, detached structures, you may need to increase your policy’s limit to assure they would be covered in the event of a loss. It is important to let your insurance agent know if a part of a detached structure is rented to others or used for business purposes.
• Water/sewer back-up
  Different than flood insurance, which must be purchased as a separate policy, this coverage will help pay for damages caused by water coming in through sewers and drains. It is extremely important, especially if you have valuable equipment and furnishings in your basement.
• Loss of use/additional living expense
  In the event you are unable to live in your house due to a fire or other insured loss, this coverage helps pay for hotel accommodations or extra rent.
• Landscaping and debris removal
  This helps pay for debris removal and damages to trees, shrubs and plants which occurred because of a fire, windstorm or other specifically listed covered losses.
• Rebuilding to code
  This covers you against changes in building codes that may make the replacement or rebuilding of your home more expensive to rebuild after a loss.
• Open peril
  Some policies limit the types of losses they will cover to only those situations specifically named on the policy. Make sure that you have open peril or "all risk" coverage that covers everything except what is specifically excluded.
• Exclusions
  Every policy has certain items that are excluded from coverage. These typically include flood, earth movement, neglect, wear and tear, etc. Make sure you review your policy and determine if you need any additional coverage.
• Special limits
  All insurance policies have specific limits that they will pay for certain items such as jewelry, watches, furs, silverware, money, securities, business property, etc. Be sure to review those limits and determine if any additional coverage is necessary.

How to manage homeowners insurance costs
The primary factors in determining the cost of homeowners insurance are:

• Age of home
• Type of construction
• Location
• Replacement value
• Level of coverage desired
• Past insurance claims
• A package policy that combines your homeowners and auto insurance
• Amount of deductible - the amount of claim costs you agree to pay out-of-pocket (The higher your deductible, the lower your cost for insurance)

• Security systems
• Deadbolt locks
• Gated community
• Smoke alarms
• Non-smoker discounts
• Senior citizen discounts
• Higher deductibles

• Swimming pools and trampolines
• Wood burning stoves/auxiliary heating systems
• Certain types of pets
• Being a smoker
• Limited or no access to fire hydrants/fire departments
• A home business

If you want to insure a condominium or apartment…
There are a number of issues that differ from insuring a free-standing home. Make sure to click on condominiums or renters to learn more about them.

If you want to insure a secondary home…
You may or may not be able to add it to your existing homeowners policy. If the home is in an out-of-state location, your current insurer may not operate in that state. Or, if the home is located in an area where insurance coverage is difficult to get - such as disaster-prone coastal areas - you may have difficulty getting the property insured. Before purchasing a secondary residence out of this area, be sure you allow plenty of time to investigate the availability and cost of insuring it. We encourage you to contact Brooks for assistance and advice regarding this or any other homeowners insurance issue.

If you have college students…
If you have college students living away from home, their personal belongings will be covered under your homeowners policy if they live on campus. However, computers and other costly electronic equipment may need to be scheduled (specifically listed) and insured separately. If they live off campus, you may need to add that location to your policy or, in certain circumstances, consider renters insurance.

If you hire individuals to work at your home…
If you have people to provide childcare, lawn care, cleaning or other services, you probably need to buy workers’ compensation insurance if they work for you on a regular basis. Depending on the state you’re in, most homeowners policies will not provide coverage if a hired worker is injured on your property. If you’re using a contracting firm, it should already provide this coverage for its employees and be able to provide "proof of insurance" when you ask for it. In Ohio, contact the Ohio Bureau of Workers’ Compensation for more information. To access workers’compensation insurance in other states, contact Brooks.

If you are building a home or making an addition…
You may need a special policy called a Builders Risk policy. This covers the location while it’s under construction and covers items such as theft of building materials or collapse. Check with your contractor to determine who will be responsible for providing this coverage.