Homeowners Insurance, also known as Hazard Insurance, is the type of property insurance that primarily covers owner occupied homes or dwellings. In 1971, the Insurance Services Office (ISO) was formed and developed a simplified homeowners insurance policy for the insurance companies. In general, it provides four (4) important areas of coverage.

*  Dwelling Structure & Other Structures                *  Personal Property

*  Loss of Use / Additional Living Expense            *  Personal Liability & Medical
                                                                                        Payment

However, there are several forms of insurance policies ranging from Basic (HO 1) and Broad (HO 2) form policies to Special (HO 3) and Premier (HO 5) form policies. Each form will determine the perils that your home is insured against. The difference is that the Basic and Broad form policies will specifically list or name the perils that are covered. Ex: The perils included in the Basic form are fire and lightning, smoke, windstorm or hail, theft, vandalism or malicious mischief, damages from vehicles or aircraft, riot or civil commotion, glass breakage, and volcanic eruption. The Special and Premier form policies basically cover all risks (perils), but specifically list or name the exclusions of coverage. Ex: Earthquakes and floods are specifically excluded on these forms. Today, most insurance carriers have adopted their own versions of the ISO homeowners insurance policy, but generally their coverage is similar to the Basic (HO 1), Broad (HO 2), Special (HO 3), and Premier (HO 5) forms.

                      Dwelling Structure and Other Structures Coverage

The dwelling structure is generally insured for a specific amount of coverage. Insurance agents can perform calculations to determine the total insurable replacement value of a home, or in other words, what it would cost to rebuild a specific home at today’s prices. Because homes are of various age, style, and construction types, every home’s total insurable replacement value will be somewhat unique. However, this value is not to be confused with a home’s current market value. Its’ market value is simply a value placed upon a home that is to be sold in its’ present condition. Most often, a home’s total insurable replacement value will be higher than its’ current market value. You may choose to insure your home for various amounts of coverage and the perils it will be insured against. Coverage amounts can range from the home’s total insurable replacement value to its’ actual cash value. The form of coverage can range from named perils to all risk coverage.

In addition to the dwelling structure, other structures on the insured premises such as garages, gazebos, pavilions, storage sheds, and etc, are generally automatically covered for a value equal to 10% or 20% of the dwelling value. This value is usually shown as a separate amount of insurance on the policy. Normally, other structures coverage can be increased when necessary. Ex: A newly built 4-car garage exceeds the 10% to 20% automatic coverage on the policy for other structures, and requires an additional $10,000.00 of coverage.

Numerous endorsements can be added to enhance the coverage of your structures. As previously mentioned, each insurance carrier offers their own variation of forms and limits of coverage. Please be sure to choose the coverage that best fits your personal needs.
                                                        
                                    Personal Property Coverage

Personal property coverage provides protection under the policy for all of your personal belongings, such as clothing, furniture, appliances, electronics, etc. Coverage is generally provided for both on and off premises. Ex: Clothing and personal items that were taken on vacation would be considered off premises, but still covered by the policy. However, there may be coverage limitations to certain items regarding off premises coverage.

The amount of coverage applicable to personal property coverage is generally a value equal to 50% to 75% of the dwelling value, and is also usually shown as a separate amount of insurance on the policy. However, there are specific coverage limitations placed on certain personal property items, such as jewelry, guns, furs, or fine arts, etc, and these specific coverage limitations will be listed or shown within the policy. If necessary, an endorsement or a policy attachment (rider) can be added to the policy to increase or provide specific coverage for an item. Ex: The policy coverage limitation for jewelry is shown to be $1,500.00, but coverage is desired for an item of jewelry that you own valued at $5,000.00. With documentation, such as an appraisal, a “ jewelry rider ” or endorsement would be added to the policy for the requested $5,000.00 of coverage.

It is also possible to insure personal property for its’ replacement value as well. This endorsement is simply and most often referred to as the Personal Property Replacement Cost Endorsement. If loss to personal property is caused by a covered peril of the policy, this endorsement basically provides coverage for the full cost of repair or replacement of the personal property at today’s prices. Without this endorsement, your loss would be settled on an actual cash value basis. Ex: Several appliances have been lost in a kitchen fire. These items are all 10 years old and collectively have an actual cash value of only $2,000.00, but it will cost $4,000.00 to $5,000.00 to replace these items new. The Personal Property Replacement Cost Endorsement will provide coverage to purchase the items new, as opposed to their actual cash value. This endorsement adds valuable coverage to any personal property loss whether large or small, and is probably the most popular of all the personal property endorsements. There are actually “ too many to list ” additional personal property endorsements available. Most interests and hobbies can be covered by endorsement.
 
Ultimately, the form and the amount of insurance to properly insure your structures and personal property is your decision. Your choices should best fit your individual interests and needs. If a mortgage exists on the property, the lender may also have certain insurance requirements that may have to be met. Perhaps you also operate a small business out of your home. Most insurers do provide a coverage extension from their homeowners insurance policy for small incidental businesses. Ex: There is a beauty or barbershop being operated from home. The business personal property would be covered at a value generally equal to 10% or 20% of the dwelling value. Limitations for on and off premises coverage may apply.

All structure and personal property coverage is subject to a policy deductible. A deductible is simply a value of the loss that an insured is willing to assume their self, before the policy affords coverage. A higher deductible will discount the policy premium. Other premium discounts may include premises alarms, newer home discounts, claims free discount, etc.

                         Loss of Use / Additional Living Expense Coverage

Loss of use, also known as additional living expense, provides coverage for the additional costs of living away from your home when it is damaged and not inhabitable. Damages must result from a covered peril under the policy such as fire. Generally, coverage will pay for you to rent another location for your family to live, or hotel bills and other living expenses while your home is being repaired or rebuilt. The amount of coverage is usually equal to 20% or 30% of the dwelling structure coverage, and is also shown as a separate amount of insurance on the policy. Some insurers may offer to pay the actual loss sustained, but not to exceed a certain period of time, usually 12 consecutive months. This coverage may also reimburse your loss of rents if you rent a portion of your home for others to live. Ex: You live in a duplex home and rent one side of the home to a tenant. If the tenants living area is also damaged and not inhabitable, the loss of rents that the tenant would have normally paid you would be reimbursed, subject to the amount of coverage available. However, your insurance coverage will not extend coverage to the tenant’s loss of personal property or their loss of use of the premises. Tenants would have to have their own insurance policy for coverage.

There may be some small variations in this coverage from one insurer to another, but for the most part, this coverage is meant to assist you financially while your loss is being settled.

                     Personal Liability and Medical Payment Coverage

Basically, personal liability coverage protects you against claims or lawsuits that may be brought against you from bodily injury, personal injury, or property damage to others caused by either you or residents of your household. This coverage will generally cover the costs of defense and any awards or judgments against you, subject to the personal liability limit of the policy. You may choose your own limit, which is usually provided in increments of 100,000.

Most insurers also offer umbrella liability insurance policies as well. These policies are generally written as a separate policy in conjunction with your automobile and homeowner insurance policies, and offer an additional layer of liability protection usually in 1,000,000 increments of coverage. Both the auto and home insurance policies usually provide a certain limit of liability coverage, or underlying limits, before the umbrella liability policy would afford coverage. These types of policies are recommended to those who need a substantial amount of liability insurance coverage to protect their most vital assets.

In general, medical payment coverage pays for the medical expenses of others who are accidentally injured on your property, or possibly off premises as well. A prime example of both on and off premises coverage would be an injury caused by an animal, such as a dog. Ex: A dog may cause another person injury while confined to your back yard, or while being taken for a walk through the neighborhood. Medical payments can be made without the injured party actually filing a liability claim against you. Medical payment coverage does not apply to you as the owner, or to residents of your household. You may also choose your limit of coverage, which usually ranges from 1,000 to 5,000.  

A deductible does not apply to personal liability and medical payment coverage. These coverages can also be extended to cover incidental businesses on the insured premises. However, because of the broad liability coverage provided by most homeowners insurance policies, any coverage extensions to business liability will have limitations or restrictions.

 

 

Uninsured and Underinsured Motorists coverage is an elective coverage under the Pennsylvania Motor Vehicle Financial Responsibility Law. It is your decision as to whether or not you purchase this coverage on your auto insurance policy. However, this coverage protects you, members of your household, and your passengers, if you are injured in a car accident, and the driver who caused the accident does not have, or does not have enough Bodily Injury Liability insurance coverage to cover your injuries. Benefits are basically paid for pain and suffering resulting from your injuries, and other out of pocket expenses. Coverage for Uninsured and Underinsured Motorists Coverage cannot exceed the limits of your Bodily Injury Liability coverage on your own auto insurance policy. Example: If your Bodily Injury Liability coverage is 100,000 / 300,000, this will also be the maximum limit of coverage available to you for your Uninsured and Underinsured Motorists Coverage.

Uninsured Motorists Coverage

This coverage protects you specifically for injuries sustained in an accident caused by a driver who has no Bodily Injury Liability insurance coverage

Underinsured Motorists Coverage

This coverage protects you specifically for injuries sustained in an accident caused by a driver who has Bodily Injury Liability insurance coverage, but not enough to cover your injuries.

Stacking of Uninsured and Underinsured Motorists Coverage

If you decide to purchase Uninsured and Underinsured Motorists Coverage, you may also choose with or without “stacking” of coverage. In simplicity, with “stacking”, if you insure more than one auto on your policy(s), your coverage would equal the sum of the coverage for all the insured autos. Example: You insure three (3) autos with 100,000 / 300,000 Uninsured / Underinsured Motorists Coverage each. With “stacking” coverage (x 3 autos), your total coverage would now be 300,000 / 900,000. Without “stacking” your coverage remains at each individual limit of 100,000 / 300,000 per auto.

Please remember that your First Party Medical Benefits Coverage will provide initial medical coverage for your injuries sustained in an auto accident for the limits that you have chosen on your policy. All other First Party Benefit Coverages will apply as well. Uninsured and Underinsured Motorists Coverage basically protects you for the pain and suffering resulting from your injuries, along with any other out of pocket expenses that may occur. Your choice of the “Full Tort” or “Limited Tort” Option on your automobile insurance policy will play a major role in determining whether or not your injuries will be considered for pain and suffering compensation. (Please review First Party Benefits, and Full Tort vs. Limited Tort)

A great deal of consideration should be given when choosing any form or option of automobile insurance coverage, especially where bodily injury is concerned. It is best to take the time and coordinate your benefits to maximize your personal insurance coverage.

 

Automobile Physical Damage Coverage is an elective coverage under your automobile insurance policy. However, if your auto is still financed through a lending institution, then the lender will generally require you to cover your auto for physical damage coverage. There are basically two (2) types of physical damage coverage, Comprehensive Coverage and Collision Coverage. Both of these coverages are normally required when automobile financing is involved. However, it is possible to elect only comprehensive coverage and not collision coverage with most insurance carriers. Please check with your own automobile insurance carrier for their insurance guidelines regarding these coverages.

 
Comprehensive Coverage

Comprehensive Coverage will generally provide coverage for your auto from damages such as broken glass, theft, vandalism, electrical fire, flood, and any accidents involving animals, birds, or persons. A deductible will usually apply to this coverage.

 
Collision Coverage

Collision Coverage generally provides coverage for your auto when your auto hits, or is hit by, another vehicle, or hits into another physical structure such as a guardrail, a telephone pole, a building, etc. A deductible will also usually apply to this coverage.

Road Service

This coverage applies mostly for towing /road repair services when your auto has either broken down, has a flat tire, won’t start because of a bad battery, is not drivable due to an accident, etc. Many insurance carriers place a dollar limit on the coverage they provide.

 
Transportation Expenses

This coverage is often referred to as rental coverage, which will provide you with a replacement auto while your auto is being repaired for a covered loss under the policy.

 
Auto Lease / Loan Coverage

In the event of a total loss to a covered auto, this coverage provides for the monetary difference between the actual cash value of the auto and the amount due on the lease / loan.

This coverage is often referred to as “Gap” insurance.

There are many additional optional coverages being offered by all of the automobile insurance carriers. We have only referenced the most popular few. Please be sure to review the coverages being offered by your present auto insurance company, and choose the coverage that best fits your needs.