Home Insurance

Bozeman Montana Real Estate, Belgrade Montana Real Estate, Big Sky Montana Real Estate, Livingston Montana Real Estate, Ennis Montana Real Estate, Dillon Montana Real Estate, and beyond.

 

Homeowner’s insurance provides financial protection against disasters. A standard policy insures the home itself and the things you keep in it.

 

Homeowners insurance is a package policy. This means that it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. This includes damage caused by household pets.

Damage caused by most disasters is covered but there are exceptions. The most significant are damage caused by floods, earthquakes and poor maintenance. You must buy two separate policies for flood and earthquake coverage. Maintenance-related problems are the homeowners' responsibility.

 

What is in a standard homeowner’s insurance policy?

 

A standard homeowner’s insurance policy includes four essential types of coverage:

   1.  Coverage for the structure of your home.
   2.  Coverage for your personal belongings.
   3.  Liability protection.
   4.  Additional living expenses in the event you are temporarily unable to live in your home because of a fire or other insured disaster.           

 

1. The Structure Of Your House

This part of your policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disaster listed in your policy. It will not pay for damage caused by a flood, earthquake or routine wear and tear. When purchasing coverage for the structure of your home, it is important to buy enough to rebuild your home.
Most standard policies also cover structures that are detached from your home such as a garage, tool shed or gazebo. Generally, these structures are covered for about 10% of the amount of insurance you have on the structure of your home. If you need more coverage, talk to your insurance agent about purchasing more insurance.


2. Your Personal Belongings

Your furniture, clothes, sports equipment and other personal items are covered if they are stolen or destroyed by fire, hurricane or other insured disaster. Most companies provide coverage for 50% to 70% of the amount of insurance you have on the structure of your home. So if you have $100,000 worth of insurance on the structure of your home, you would have between $50,000 to $70,000 worth of coverage for your belongings. The best way to determine if this is enough coverage is to conduct a home inventory.

 

This part of your policy includes off-premises coverage. This means that your belongings are covered anywhere in the world, unless you have decided against off-premises coverage. Some companies limit the amount to 10% of the amount of insurance you have for your possessions.

 

You have up to $500 of coverage for unauthorized use of your credit cards.

Expensive items like jewelry, furs and silverware are covered, but there are usually dollar limits if they are stolen. Generally, you are covered for between $1,000 to $2,000 for all of your jewelry and furs. To insure these items to their full value, purchase a special personal property endorsement or floater and insure the item for it's appraised value. Coverage includes “accidental disappearance,” meaning coverage if you simply lose that item. And there is no deductible.

 

Trees, plants and shrubs are also covered under standard homeowners insurance. Generally you are covered for 5% of the insurance on the house—up to about $500 per item. Perils covered are theft, fire, lightning, explosion, vandalism, riot and even falling aircraft. They are not covered for damage by wind or disease.

 

3. Liability Protection

Liability covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by your pets. So, if your son, daughter or dog accidentally ruins your neighbor’s expensive rug, you are covered. However, if they destroy your rug, you are not covered.

The liability portion of your policy pays for both the cost of defending you in court and any court awards—up to the limit of your policy. You are also covered not just in your home, but anywhere in the world.

Liability limits generally start at about $100,000. However, experts recommend that you purchase at least $300,000 worth of protection. Some people feel more comfortable with even more coverage. You can purchase an umbrella or excess liability policy which provides broader coverage, including claims against you for libel and slander, as well as higher liability limits. Generally, umbrella policies cost from $200 to $350 for $1 million of additional liability protection.

 

Your policy also provides no-fault medical coverage. In the event a friend or neighbor is injured in your home, he or she can simply submit medical bills to your insurance company. This way, expenses are paid without a liability claim being filed against you. You can generally get $1,000 to $5,000 worth of this coverage. It does not, however, pay the medical bills for your family or your pet.

 

4. Additional Living Expenses

This pays the additional costs of living away from home if you can't live there due to damage from a fire, storm or other insured disaster. It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt. Coverage for additional living expenses differs from company to company. Many policies provide coverage for about 20% of the insurance on your house. You can increase this coverage, however, for an additional premium.

 

Some companies sell a policy that provides an unlimited amount of loss-of-use coverage, but for a limited amount of time.

If you rent out part of your house, this coverage also reimburses you for the rent that you would have collected from your tenant if your home had not been destroyed.

 

Should I get Earthquake Insurance?

Are there different types of policies?

 

Yes. A person who owns his or her home would have a different policy from someone who rents. Policies also differ on the amount of insurance coverage provided.

The different types of homeowners policies are fairly standard throughout the country. However, individual states and companies may offer policies that are slightly different or go by other names such as “standard” or “deluxe”.

The chart below lists the disasters covered in each of the following types of policies:


 


Dwelling & personal property


Dwelling


Personal
property


Dwelling & personal property

 


Perils


Basic HO-1*+

Broad HO-2*


Special HO-3*


Special HO-3


Renters HO-4


Condo/
Co-op HO-6


Modified Coverage HO-8

1. Fire or lightning

x

x

x

x

x

x

x

2. Windstorm or hail

x

x

x

x

x

x

x

3. Explosion

x

x

x

x

x

x

x

4. Riot or civil commotion

x

x

x

x

x

x

x

5. Damage caused by aircraft

x

x

x

x

x

x

x

6. Damage caused by vehicles

x

x

x

x

x

x

x

7. Smoke

x

x

x

x

x

x

x

8. Vandalism or malicious mischief

x

x

x

x

x

x

x

9. Theft

x

x

x

x

x

x

x

10. Volcanic eruption

x

x

x

x

x

x

x

11. Falling object

 

x

x

x

x

x

 

12. Weight of ice, snow or sleet

 

x

x

x

x

x

 

13.  Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance.

 

x

x

x

x

x

 

14. Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system.

 

x

x

x

x

x

 

15. Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance.

 

x

x

x

x

x

 

16. Sudden and accidental damage from artificially generated electrical current (does not include loss  to a tube, transistor or similar electronic component)

 

x

x

x

x

x

 

All perils except flood, earthquake, war, nuclear accident, landslide, mudslide, sinkhole and others specified in your policy. Check your policy for a complete list of perils excluded.

 

 

x

 

 

 

 

* HO-1, HO-2 and HO-3 refer to standard Homeowners Policies. +HO-1 has been discontinued in most states.

If you own your home

If you own the home you live in, you have several policies to choose from. The most popular policy is the HO-3, which provides the broadest coverage. Owners of multi-family homes generally purchase an HO-3 with an endorsement to cover the risks associated with having renters live in their homes.

HO-1: Limited coverage policy
This “bare bones” policy covers you against the first 10 disasters. It's no longer available in most states.

HO-2: Basic policy
A basic policy provides protection against all 16 disasters. There is a version of HO-2 designed for mobile homes.

HO-3: The most popular policy
This “special” policy protects your home from all perils except those specifically excluded. (Click on the link below for a sample HO-3 form; you will need Acrobat which you can download, free of charge, from the Adobe Web site: Get Adobe Acrobat    Download/View File: HO-3 Form (160 K)

 

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