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Home Insurance Basics

Comparison shopping for homeowner’s insurance can be worth the effort. Be a wise consumer and shop around for the product that is best for you. Insurance companies vary greatly in the price of their policies and in the level of service they provide to consumers.

Get a Price Quote

Premium quotations are a useful tool for comparing different companies’ products. Make sure that you are comparing policies with the same deductibles and level of coverage.

Be prepared to give the agent or insurance company the following:

  • Description of your house
  • Complete address
  • What your house is made of (for example, all wood, all brick, brick and stucco)
  • The number of stories
  • The number of rooms
  • Age of the house
  • Square footage
  • Distance from the nearest fire department and fire hydrant
  • Security devices
  • The coverage you want
  • The deductibles you want
If You Have A Loss
Before a Loss

Read your policy
– The most important part of your insurance coverage is you. Be sure to read and understand all the terms of your policy.

Make an inventory list - It is very helpful to prepare some type of inventory of your possessions now, before something happens to them. A simple way to do this is to go methodically from room to room and make a written list of your possessions and record their values. Make special note of property that is unusually valuable. Do not forget the garage, basement, attic, and outdoor storage areas. Taking pictures of your belongings is even easier. A video camera does an especially quick, thorough job of documentation. Purchase receipts are the best documentation. You should keep all receipts and photos with your inventory list. Arrange to store your documentation somewhere other than at your home – for instance, in a safe deposit box or with a trusted friend. That way, you will not have to worry that a fire or other calamity will destroy your records just when you need them most.

Loss prevention tips - Taking steps to prevent losses, such as installing and checking smoke and carbon monoxide detectors, practicing family evacuation drills, and keeping your home clear of trash, debris and clutter can help prevent losses and be just as important as buying insurance to cover them.

After a Loss

Call the police
– Report theft losses to the local police immediately. If you have lost your checkbook or credit cards, notify the bank or credit card company as well. If there has been a major storm or other disaster in your area, check with the police or local news sources to see if a disaster assistance center has been set up.

Call your agent or insurance company – Phone your agent or insurance company promptly to report your loss. Have your policy number ready, and make note of any instructions you are given. Claim filing requirements can vary from company to company, so ask what documents, forms and data should be presented with your claim. Your agent or insurance company is the best source for assistance in answering questions or filling out the required claim forms.

Make necessary repairs – If your property has been damaged, it is important to make any necessary temporary repairs to protect the property from further loss or damage. (The insurance policy’s term for this is “mitigating your damages.”) For example, if windows are broken, have them boarded up to protect against vandalism or weather. Expenses for making necessary temporary repairs are usually covered under your policy, but be sure to save all receipts or bills. Permanent repairs must wait until the insurance adjuster has reviewed the damage.

Determine the extent of your damage – This can be emotionally upsetting, but is absolutely critical. Begin by making a written list of what was damaged. Make a separate list of possessions that have been damaged beyond repair. Do not discard any damaged property until after the insurance company has had a chance to inspect it.

Submit a copy of your list to your insurer – The list should include information used to support the actual cash value (or replacement cost, if you have that coverage) of the damaged items (see page 36). Necessary information includes purchase dates, purchase price, and the cost to replace with a similar item. Make your list as complete as possible. Provide receipts, photos, or other information that is still available to help you prove the value of your claim.

“Holdback” of Payment – Even if you have purchased Replacement Cost Coverage, the company may “holdback” some amount of your claim payment and require that you actually incur the expense of repairing or replacing lost or damaged items before making payment. The policy usually sets a time frame for the replacement or repair of claimed items.

How to claim additional living expenses – If you cannot live in your damaged home, keep all receipts for additional living expenses. List them and submit a copy to your insurer so it can be determined how much you should be repaid under the additional living expenses coverage in your policy.

When a Settlement is Offered

It is important to keep the lines of communication open between you and the insurance company representatives throughout the claim process.

When a settlement figure is offered, you will receive an itemized estimate of repair or replacement explaining how the company arrived at the settlement figure. You should review and discuss the estimate with your contractor of choice. If either you or your contractor have questions or concerns, discuss them with your agent and/or the claims adjuster before you accept the settlement offer, if possible.

The insurance company must give you the name of a contractor who will do the work at the price quoted by the insurer. The insurance claims adjuster is generally the person best able to resolve your concerns and finalize the claim to your satisfaction.

If, once the claim process is complete, you still feel that the amount of money being offered to settle your claim is not fair, consult your policy for information regarding filing a notice of a disputed claim, an internal appeal, or appointing an independent appraiser.

Can Your Policy be Cancelled?
Terminations, Denials and Cancellations

New Policies
- When a policy first takes effect, the insurer has a right to cancel that policy any time within the first 60 days for any reason not otherwise prohibited by law. The cancellation is not effective until at least 10 days after the insurance company mails or delivers to you a written notice of cancellation.

Renewal on Altered Terms - Sometimes an insurer will renew a policy, but will raise the rates or make the terms less favorable. An insurer is not allowed to change the terms of coverage unless it gives written notice of the changes to the insured, along with the renewal offer. To be effective, the notice must be mailed no less than 30 days before the renewal date.

Non-renewal - Non-renewal of a policy refers to the termination of a policy at its expiration date. If the insurance company decides that it does not want to renew your policy, it must mail or deliver to you a written notice at least 30 days before the expiration date. The non-renewal or cancellation notice must include the specific reason for the non-renewal or cancellation as well as the facts that make that reason applicable to your policy. Refer to your insurance policy for a list of the reasons your company may non-renew your policy.

Termination for Non-Payment of Premium - Any insurance company will terminate coverage if the premium is not paid on time. There is no grace period for premium payments for homeowners insurance. Always be sure to pay your premiums promptly.

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