To many people, homeowners insurance is an afterthought.  Get a quote, sign a form and it is done.  The mortgage company makes the payments, so it is out of sight and out of mind.  However, if you ever have to make a claim, it is not always so simple.  Today I thought I would highlight a few of the more common questions that often come up regarding homeowners insurance, and test your knowledge about few of the finer points.

Is all of my personal property covered, regardless of the value?

Many people don't know that certain types of personal property may not be fully covered under standard homeowners insurance.  Most of your possessions are covered under the personal property section of your policy in the event of a loss.  However, items such as jewelry, furs, guns, coins, currency, and collectibles are subject to specific limits of coverage on a standard policy.  For example, on a standard homeowners policy, jewelry is covered up to a maximum of $2,500, regardless of its value.  So if you have ring worth $6,000, and it is stolen, the most you will be reimbursed if you file a claim would be $2,500.

Now, if you have any of these items that are worth more than the policy limits, it does not mean you are out of luck.   You can purchase the additional coverage you need (and it is usually relatively inexpensive).  Talk to your agent about adding these items to your policy.  You may need special documentation, such as a receipt or an appraisal.

Does my homeowners insurance cover water damage?

Often, people do not realize that damage caused by water entering your home is not covered on your standard homeowners insurance policy.  Most insurance companies offer an endorsement to cover water damage resulting from sump pump failure or sewer backup, but this coverage is not automatic and must be purchased in addition.  Damage caused by flooding, or even seepage is never covered by homeowners, even with the aforementioned endorsement.

To protect against damage caused by flooding (not sump pump failure or sewer back up), you must purchase flood insurance.  Flood insurance is a separate, stand-alone policy offered by many insurance companies through the National Flood Insurance Program (NFIP) which is administered by FEMA.  Flood insurance may be mandatory if you live in certain areas determined to be Special Flood Hazard Areas (SFHAs). 

Believe it or not, some small sections of Oak Lawn, Palos, and other parts of the Southwest Suburbs are considered to be SFHAs.  If you live in, or are thinking about buying a home in one of these areas, you will be required to purchase flood insurance by your mortgage company.  Talk to your insurance agent to learn more about how this works.

Why is covered by liability insurance?

Liability insurance covers you against injuries to others for which you are responsible.  It also provides coverage for damage to the property of others.  The main purpose of liability insurance is to protect the homeowner and his or her family from lawsuits that could result from such injuries or damage. 

For example, you are entertaining guests when one of them falls down your stairs as a result of a loose railing.  As the homeowner you are responsible for the railing being loose, so therefore you can be held liable for your guest’s injuries.   Should your guest (or their insurance company) decide to pursue legal action against you, your liability insurance should cover court costs, medical bills, and other damages awarded. 

There is no easy answer to determine how much liability coverage you should have.  Your agent can help decide what is most appropriate.  You will want to take into consideration your household income as well as your assets to determine how much you have at risk.  Many experts will say your liability limit should be no less than three times your household income, and no less than your total assets.

Most insurance companies have liability limits ranging from $50,000 to as high as $1,000,000 on homeowners policies.  If necessary, additional liability coverage can be purchased in the form of an umbrella policy.

For questions, quotes, and advice, feel free to call, email, or stop by any time.

Joe Voves
Country Financial
2835 W 95^th St
Evergreen Park, IL 60805

Joe.voves@countryfinancial.com
www.countryfinancial.com/joe.voves