Homeowners Insurance Basics and Home Inventory Services

Home Insurance is something most people don't consider until they need it. However, understanding what is and isn’t covered in your homeowner's insurance policy can mean the difference of being able to rebuild your home and replace your personal belongings. Homeowners need to do an annual insurance policy review to make sure they keep up with local building costs, home remodeling and inventories of their personal belongings.

The typical homeowner's insurance policy covers damage resulting from fire, windstorm, hail, water damage (excluding flooding), riots and explosion as well as other causes of loss, such as theft and the extra cost of living elsewhere which the structure is being repaired or rebuilt. Although your homeowner's policy will cover some personal property losses, you may be required to insure valuables such as antiques, jewelry, furs, works of art, silverware, and camera equipment separately under special riders to your policy.

Having an up-to-date home inventory will ensure faster and more accurate claim settlements, verify losses for income tax returns and details personal property for the correct amount of insurance coverage. A Professional Home Inventory Service documents your personal property and provides a resource for you to determine with your Agent how much insurance to carry, whether you should insure for actual cost or replacement cost, and whether you should have additional riders to cover your valuables.

Learn more about the claims process.

When you insure your home, you are really insuring two distinctly different areas, 1) your personal property or the contents of your home and 2) the structure of the home. There are different types of coverage available for each of these areas. An Insurance Company like Aviva will require documentation of the contents of your home to settle your claim fairly.

Insuring your personal property:

Replacement Cost Coverage. Insurance that pays the dollar amount needed to replace damaged personal property with items of like kind or quality without deduction for depreciation.
Actual Cash Value. Insurance under which the policyholder receives an amount equal to the replacement value of damaged property minus depreciation. Unless a homeowners policy specifies that property is covered for its replacement value, the coverage is for actual cash value.

Our home inventory services detail the differences.

Insuring the structure of your home:

Replacement Cost. Insurance that pays the policyholder the cost of replacing the damaged property without deduction for depreciation, but limited to a maximum dollar amount.
Extended Replacement Cost. An extended replacement cost policy, one that covers costs up to a certain percentage over the limit (usually 20%). This gives you protection against such things as a sudden increase in construction costs.
Actual Cash Value. This covers the cost to replace your home minus depreciation costs for age and use. For example, if the life expectancy of your roof is 20 years and your roof is 15 years old, the cost to replace it in today’s marketplace is going to be much higher than its actual cash value.

Your Agent will advice you to insure your home for the total amount it would cost to rebuild your home if it were destroyed. That�s not the market value, but the cost to rebuild. If you don�t have sufficient insurance, your company may only pay a portion of the cost of replacing or repairing damaged items.

There are several basic types of home insurance policies:

HO-1	Basic homeowners policy	Covers your house and possessions against 11 different perils.
HO-2	Broad homeowners policy	Covers house and contents against 17 perils, with premiums running about 5 percent to 10 percent more than an HO-1 policy.
HO-3	Special homeowners policy	Covers all perils except those specifically excluded by the policy. Costs 10 percent to 15 percent more than an HO-1 policy.
HO-4	Renters Policy	Covers 17 named perils and includes liability coverage. It does not insure the dwelling itself.
HO-5	Extensive homeowners policy	Covers damage from practically everything except earthquakes, wars and floods.
HO-6	For owners of co-ops or condominiums	Provides personal property coverage, liability coverage and specific coverage of improvements to the owner’s unit. Insurance provided by the owner’s association normally covers most of the actual structure.
HO-8	Policy for older homes	Covers the same perils as HO-1 but pays only for repair costs or actual cash value, since replacement cost could make the policy costly.

Get homeowners insurance coverage types and what home insurance usually covers. Contact your insurance agent to discuss the correct homeowners policy for your needs. Also get tips on how to acquire discounts on home insurance quotes.

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