If you have a mortgage on your home, the mortgage company requires you maintain homeowner’s insurance. Most people will call an insurance agent, spend 10 or 15 minutes answering questions, get a bill for a premium, and voila! coverage that satisfies the mortgage company. Out of sight, out of mind. That is, until you have a loss. Between fire and water, in the last few years, thousands of Houstonians have had to file insurance claims on their homes. Only then do they realize their policy is not what they imagined. These posts on homeowner’s insurance seek to educate you BEFORE a loss; to ensure that you have adequate coverage and minimize surprises. An ounce of prevention is worth a pound of cure.
The first part of your homeowner’s insurance policy is the Declaration Sheet. This identifies the insured premises, the type of coverages, the policy limits for each type of coverage, the premium, and the dates of the coverage.
The major types of coverage and amounts of coverage on the Declaration Sheet are typically as follows:
Coverage A:
Coverage for the dwelling, and “other structures”, not attached to the dwelling (example; garage, shed, barn). Typically, the coverage limit for “other structures” is limited to 10% of that for the primary residence. Example, if your primary residence has $250,00 coverage, the limit for “other structures” is 10% or $25,000.
Coverage B:
Coverage for your personal property. There are separate limits for your personal property located on the property, and your possessions that are located off the property. Typically, the limit for off-property possessions is 10% of the on-property limit.
Coverage C:
Personal Liability. This covers a situation if a visitor sues you for a personal injury claim that occurs on your property.
Coverage D:
Medical payment to others. If a visitor gets injured on your property, this coverage will pay for the medical bills of the visitor up to the listed limit.
The policy limits for these categories are something that you will negotiate with your insurance agent when you purchase the property. For personal property loss, personal liability, and medical payments, the coverage limits are variable. The more coverage you want, the higher the premium.
Following the Declaration Sheet, the next part of your homeowner’s insurance is the Policy itself. In Texas this consists of form approved by the Texas Department of Insurance. The most used form for owner-occupied residences is Homeowners Form A. In a separate section will be ‘Endorsement’ or changes to Form A that each insurance company utilizes. Keep in mind that the Form A and Endorsements can easily extend to more than 30 pages, the majority of which will be what’s NOT covered.
A good overview of the terms and conditions in a home insurance policy can be found at: https://www.investopedia.com/insurance/homeowners-insurance-guide/
It is important to know what is covered and what is not covered when you buy or renew your policy, BEFORE you suffer a loss. If you know the holes in coverage of a “standard” homeowner’s policy, you can negotiate coverage with your insurance agent to plug these coverage holes, many times at a modest additional cost.
In upcoming posts, we will be discussing the specific provisions of Form A, and some of the more typical Endorsements or changes that insurance companies utilize.
If you need assistance in determining what your insurance policy covers or does not cover, or if you need help in making a claim, contact the Law Office of Elliott Klein for a consultation.