Homeowners Insurance FAQ
- What are the advantages of using an agent to purchase insurance?
- What are some practical things I can do to lower the cost of my homeowners insurance?
- What does homeowner's insurance cover?
- What is the difference between "actual cash value" and "replacement cost"?
- What factors should I consider when purchasing homeowner's insurance?
- What are the policy limits (that is, coverage limits) in the standard homeowner's policy?
- Where and when is my personal property covered?
- Do I need earthquake coverage? How can I get it?
What are the advantages of using an agent to purchase insurance?
By using an agent to purchase insurance, you can receive more personal service. An agent with whom there is direct contact can be vital when purchasing a product and absolutely necessary when filing a claim. A local, independent agent can deliver quality insurance with competitive pricing and personalized service.
What are some practical things I can do to lower the cost of my homeowners insurance?
You can do a number of things to lower the cost of your homeowner's insurance. The easiest thing to do is get a comprehensive review of your policy and needs from your local Wescom Insurance Services agent.
It is not surprising to find quotes on homeowners insurance that vary by hundreds of dollars for the same coverage on the same home. When you shop, be careful to make sure each insurer is offering the same coverage.
Another way to lower the cost of your homeowners insurance is to look for any discounts you may qualify for. For example, many insurers will offer a discount when you place both your automobile and homeowner's insurance with them. Other times, insurers offer discounts if there are deadbolt exterior locks on all your doors, or if your home has a security system. Be sure to ask us about any discounts for which you may qualify.
Another easy way to lower the cost of your homeowner's insurance is to raise your deductible. Increasing your deductible from $250 to $500 will lower your premium, sometimes by as much as five or ten percent.
What does homeowner's insurance cover?
The typical homeowner's policy has two main sections:
- Section I covers the property of the insured.
- Section II provides personal liability coverage for the insured. Almost anyone who owns or leases property has a need for this type of insurance. Usually, homeowners insurance is required by the lender to obtain a mortgage.
What is the difference between "actual cash value" and "replacement cost"?
Covered losses under a homeowner's policy can be paid on either an actual cash value basis or on a replacement cost basis. When "actual cash value" is used, the policy owner is entitled to the depreciated value of the damaged property. Under the "replacement cost" coverage, the policy owner is reimbursed an amount necessary to replace the article with one of similar type and quality at current prices.
What factors should I consider when purchasing homeowner's insurance?
Here is a checklist of things you should consider when you purchase homeowner's insurance:
- Determine the amount and type of insurance you need. The coverage limit of your house should equal 100% of its replacement cost. If your policy limit is less than 80% of the replacement cost of your home, any payment from your insurance company will be less than the full cost to replace your home; you'll have to pay the rest out of your own pocket. Also, decide if the personal property and personal liability limits are adequate for your needs.
- Determine which, if any, additional endorsements you want to add to your policy. For example, do you want the personal property replacement cost endorsement, an earthquake endorsement or a jewelry endorsement?
- Once you have decided on the coverage you want in your homeowner's insurance policy, talk to Wescom Insurance at 1-888-4WESCOM (1-888-493-7266). We will be able to help you determine if there are any gaps in coverage you might not have been aware of, explain the details of the policy's exclusions and limitations as well as recommend an insurer that will live up to your expectations.
What are the policy limits (that is, coverage limits) in the standard homeowner's policy?
The dwelling and other structures on the premises are protected on an "all risks" basis up to the policy limits. "All risks" means that unless the policy specifically excludes the manner in which your home is damaged or destroyed, there is coverage. The policy limit for the dwelling is set by the policyowner at the time the insurance is purchased. The policy limit for the other structure is usually equal to 10% of the policy limit for the dwelling.
Losses to your personal property are covered on a "named perils" basis. "Named perils" means that you have coverage only when your property is damaged or destroyed in the manner specifically described in the policy. The policy limit on the coverage is equal to 50% of the policy limit on the dwelling. Limits for the coverage for the additional expenses that the policyowner may incur when the residence cannot be used because of an insured loss is equal to 20% of the policy limit on the dwelling.
The coverage limit on personal liability is determined by the policyowner at the time the policy is issued. The coverage limit on medical payments to others is usually set at $1,000 per injured person.
[Note: This answer is based on the Insurance Services Office's HO-3 policy.]
Where and when is my personal property covered?
Personal property (except property that is specifically excluded) is covered anywhere in the world. For example, suppose that while traveling, you purchased a dresser and you want to ship it home. Your homeowner's policy would provide coverage for the named perils while the dresser is in transit -- even though the dresser has never been in your home before.
Do I need earthquake coverage? How can I get it?
The standard insurance policy does not pay for direct damages caused by "earth movement." "Earth movement" is a much broader term than earthquake. It includes earthquake, volcanic activity and other earth movement. This coverage may be available by endorsement for an additional charge. If you live in an area that is more likely to have an earthquake, you'll pay more than if you live in an area that is unlikely to have an earthquake. We can help you weigh the costs and benefits of this coverage before you decide to purchase.
Insurance services offered through Wescom Credit Union, CA Ins Lic #0D64850.