DeSpain Insurance PLLC

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Because Life Happens.... An ongoing series of informational insurance tidbits.

Homeowners Policy 101

November 17, 2021

Unprepared and Underinsured

Have you ever been in the desert in the middle of summer, hiking without water? Well for me, that scorching day which initially was planned to be an early morning hike, turned into a 17-mile excursion into the middle of the Arizonan oven!

We started with a short goal in mind, planned enough water for our short trip, and then ran into some unexpected mishaps. De-trailed, dehydrated, injured, fatigued, no cell service, with only drops of water left, gave us no other option than to move forward in our bedraggled, sunburned, cotton-mouthed state. Lucky for us, we both found our way out of the desert, and survived the tale. However, we were unprepared, unsuspecting, and unfit for the journey that we embarked on.

Similar to our desert fiasco, is the unsuspecting homeowner’s loss, when perceived coverage just isn’t enough. Unprepared to cover the financial cost, unsuspecting of any policy errors, and unfit to rebuild, and restart, is a fate worse than a 17-mile trek through the blistering heat.

Homeowner Policy Alphabet

In a few short steps, you can understand your policy, and rest assured that you truly are prepared and covered for any loss. Pull out your Policy, and let’s get started with the Homeowners Policy Alphabet……...A, B, C, D, E, & F

  • Coverage A: Dwelling Is the coverage that covers your home’s dwelling or structure, this doesn’t include the land your home is located on. Any square footage that is attached to your house, garages, store rooms, basements, and attics, are included. Things to take account of are any upgrades you have done, type of roofing, wall coverings, floor coverings, and structural details. If your home were burned down, how much would it cost to re-build the structure? Total this amount, and it should be close to your Coverage A on your policy.
  • Coverage B: Other Structures This coverage includes all detached structures on your property. Detached garages, barns, porches, patios, decks, pools, sheds, carports, etc. Any item on your property that isn’t attached to your home needs to be included in this amount to be appropriately covered in the event of a loss. This coverage is calculated as 10% of coverage A, and needs to be raised if your other structures exceed that amount.
  • Coverage C: Personal Property This coverage covers your contents inside your dwelling, including furniture, appliances, clothing, tools, decorations, dishes, toys, all items that you would want replaced in the event of a loss. Often times this is where individuals short themselves in coverage, thinking that their items don’t really add up to that much. The best way to calculate this coverage is to take a home inventory, and calculate the total value of each room’s contents. Add all room totals up, to estimate the Personal Property Coverage that you will need to carry if all your homes belongings were to be lost or destroyed. Often agencies will take 50% of Coverage A to estimate the Personal Property coverage an individual will need. It is up to the individual to raise the coverage if more coverage is needed.
  • Coverage D: Loss of Use This coverage kicks in if your premises is unfit to live in. payment will cover living expenses for the shortest amount of time that it will take to make repairs. This coverage is also taken as 10-30% of coverage A for HO-2, HO-3, HO-5, and HO-8 policies, and 30-50% of coverage C for HO-4, and HO-6 policies
  • Coverage E: Personal Liability This coverage in necessary to cover any lawsuits, or medical bills that are brought against you if bodily injury, or property damage occurs on your premises.
  • Coverage F: Medical Payments to Others Is an additional coverage, and is shown on your policy as a deductible. This is a goodwill coverage, which pays medical expenses up to three years after an injury is sustained on your premises, and is a means to avoiding liability claims. Coverages include medical, surgical, w-ray, dental, ambulance, hospital, professional nursing, prosthetic devices, and funeral services.

How to Avoid an Insurance Fiasco

  1. Read your policy, to understand the ins and outs of your specific coverage
  2. Go over your policy annually and make adjustments as necessary
  3. Create a home inventory, and add new items as purchased

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