homeowners guide Insurance history

Document Sample
homeowners guide Insurance history Powered By Docstoc
					                                      A guide to …


                                      Homeowners
                                      Insurance

      Alabama department
          of insurance
                  Jim L. Ridling
                        Commissioner
PHONE: 334/269-3550                           Web site: WWW.ALDOI.GOV
           Email: INSDEPT@INSURANCE.ALABAMA.GOV
          PO Box 303351, Montgomery, AL 36130-3351
               201 Monroe Street, Suite 1700 , RSA Tower
                      (After June 1, ALDOI moves to Suite 500)



      Although a beautiful place to call home, Alabama’s weather is quite
fickle. We are subject to tornadoes, hurricanes, flood, and even earthquakes.
This guide takes you through the ins and outs of homeowners’ insurance.

     The Alabama Department of Insurance stands ready to assist Alabama
consumers with their insurance questions.
HOMEOWNERS INSURANCE GUIDE                                                             ALABAMA DEPARTMENT OF INSURANCE




Why do I need insurance?
  Homeowners insurance is an important purchase for
                                                                  2. To satisfy your mortgage lender
many people who own or are paying on a mortgage to
                                                                    Most mortgage lenders require you to have insurance as
eventually own their home. There are two major reasons
                                                                  long as you have a mortgage and to list them as the mort-
to buy homeowners insurance.
                                                                  gagee on the policy. If you let your insurance lapse, your
1. To protect your assets                                         mortgage lender will likely have your home insured. The
  Homeowners insurance covers both your property and              premium may be much higher (and the coverage much
your personal legal responsibility (or liability) for injuries to less) than a policy you would buy on your own. The lender
others or their property while they’re on your property.          can require you to pay this higher premium until you get
                                                                  your own homeowners insurance again.




It cover this …                          But likely not this ... And maybe this ...
•   Your house and other buildings •         Flood                                 •   Dog bites
    on your property                                                               •   Swimming pools
                                         •   Earthquake
•   Your personal property in your                                                 •   Trampolines
    home or on your property             •   Landslide                             •   Operating a business from your
                                                                                       home
•   Your personal liability              •   Mudslide

•   Medical payments for others          •   Sewer backup                          And limits on this …
    accidentally hurt on your prop-                                                •   Mold
    erty                                 •   Septic tank backup                    •   Jewelry, guns, electronics, col-
                                                                                       lectibles, and antiques
•   Additional living expenses if        •   Identity theft                        •   The costs of meeting updated
    you must rent a place to live                                                      electrical, fire, plumbing, and
    while your home is being re-                                                       building codes
    paired




Actual cost value vs.                                            How do I get flood insurance …
                                                                 and coverage for limited items?
Replacement cost value
  If your home is insured on a replacement cost basis,    Many agents can sell you a flood insurance pol-
then claims are paid based on the cost to replace your  icy. The company that the agent represents may
loss, not its market value.                             administer the policy, but the policy is backed by
                                                        the National Flood Insurance Program, which is a
  The replacement cost is usually greater than the mar- division of the Federal Emergency Management
ket value. If your policy is based on replacement cost, Agency.
you must replace your property to be reimbursed; there    Most companies will sell additional coverage to
are limits on the amount you can be reimbursed for      cover earthquakes, or coverage for personal prop-
your home.                                              erty such as jewelry , guns or luxury items.
HOMEOWNERS INSURANCE GUIDE                                                   ALABAMA DEPARTMENT OF INSURANCE



    Some basic questions                              •   If I submit a claim, how will it affect
      to ask your agent                                   my premium when I renew the pol-
                                                          icy?
•   Are you licensed by the Alabama De-               •   What discounts are available?
    partment of Insurance?
                                                      •   What does the policy cover?
•   For how long?
                                                      •   What does it not cover?
•   Have you ever been the subject of a
    disciplinary action by the Depart-                •   What are the limits to the cover-
    ment?                                                 ages?
•   Is the company you are representing               •   How much coverage for my personal
    licensed by the Alabama Depart-                       property do I need?
    ment of Insurance?                                •   Should I buy flood insurance or
•   How can I find out the claims history                 earthquake coverage?
    of the home before I buy it?

                    How the premium is determined
  Many factors determine the premium you will pay.        other type of insurance with the same insur-
Different insurance companies charge different            ance company
premiums for similar coverage.
                                                      •   Your credit history – the agent may ask you for
                                                          your Social Security Number
 Shop around: getting three or more comparison
quotes is worthwhile.                                 •   Whether you currently have homeowners insur-
                                                          ance
  Be prepared to give your agent information about
the following items that are commonly used to de- •       Your previous homeowners insurance claims
termine your premium:                                     history such as fire, theft, or liability
                                                      •   The claims history of the home such as water
•   The amount of your deductible
                                                          damage or roof damage
•   The cost to rebuild your home. This is not the
    same as the purchase price (which includes the •      The types of pets you have
    cost of the land). The agent may help you esti- •     Whether you have a swimming pool or trampo-
    mate the replacement cost using information           line
    about your home and its contents.
                                                      •   Whether you have protection devices such as
•   Whether your home is made of brick or wood
                                                          smoke detectors, burglar alarm, or sprinkler
•   The distance from your home to a fire hydrant         system
    or fire department
                                                      •   Whether you have a wood furnace or wood
• The age of your home                                    stove
•   Whether you also insure your auto, life or some   •   Whether you operate a home business
HOMEOWNERS INSURANCE GUIDE                                                    ALABAMA DEPARTMENT OF INSURANCE


I rent my home … what about me?
  Your landlord’s homeowners’ in-       Can you get a discount on           with your insurance agent or com-
surance does NOT cover your be-       renter’s insurance if your resi-      pany about the options and how
longings, nor your actions.           dence has particular safety fea-      they might affect your premium
                                      tures, like a burglar alarm? Many     costs.
  How much renter’s insurance do insurers will reduce your premiums
                                                                              Does renter’s insurance only
you need? Talk to your insurance if you have fire or burglar alarms,
                                                                            cover you when you’re at home?
agent or company about the prop- fire extinguishers, sprinkler sys-
                                                                            Many policies do not limit protec-
erty you want to protect and the      tems and/or deadbolts on exterior
                                                                            tion to home-based situations. For
property hazards you would like to doors. Some companies might also
                                                                            example, items you have insured
be insured from. They will answer offer discounts if you have more
                                                                            often are covered if they are stolen
any important questions you have than one policy with them. Be sure
                                                                            by someone who breaks into your
about:                                to ask about any discount you
                                                                            car or if they are damaged while
                                      might be entitled to.
                                                                            not on your property.
• What hazards are included in
    your plan and if you need a         Are you covered in the case of a      Is personal liability included? A
    separate policy for specific cir- flood or earthquake? Same as a        renter’s insurance policy covers
    cumstances?                       homeowners policy, these are not      your property and your personal
                                      covered events.                       legal responsibility (or liability) for
• If your insurance plan affects
                                                                            injuries to others and/or their prop-
    your roommate(s), if any.
                                        Could owning a pet cause your       erty while they are on your prop-
                                      premium to be higher? Certain mu-     erty.
• How you should determine
                                      nicipalities require that owners of
    value for your items.                                                     Will you receive additional living
                                      select breeds of pets have insur-
                                                                            expenses if you have to live some-
                                      ance policies to cover damages
• What some of the insurance                                                where else while your apartment is
                                      and/or injuries caused by the ani-
    terms mean or what they in-                                             being repaired? If there is damage
                                      mal.
    clude.                                                                  to the building you are renting and
                                        This liability might be covered     you must live elsewhere while the
• What optional coverage might
                                      under a standard renter’s insur-      building is being repaired, you will
    be available to you.
                                      ance policy, but some insurance       have coverage for additional living
• How much liability coverage is companies might require the pur-           expenses incurred during the re-
    included in your plan             chase of additional coverage. Talk    construction period.

                                                               including your pictures/videos. Also update
What do I do now?                                              your inventory when you buy new items.
• Pay the premium on time. Most insurers don’t offer           - Keep receipts with your inventory for all re-
a grace period for paying the premium – the due date           pairs and new items you buy for proof if you
is the due date.                                               file a claim.
• Make an inventory.                                     • Maintain your home.
     - Go through each room; write down and take
     pictures or videos of everything in the room.             - A homeowners policy isn’t a maintenance
       - Inventory everything, including valuable              contract; it insures against things such as fire,
       items such as antiques, electronics, jewelry,           wind, and hail. It doesn’t pay to repair items
       collectibles, and guns.                                 that simply wear out, like rotted porch railings.
       - Store your inventory in a secure place at an-         You’re responsible for the upkeep of your
       other location such as your workplace, a safe           home such as repairing your roof when it be-
       deposit box, a relative’s house, or online.             gins to leak or cleaning your chimney flue so it
       - Annually review and update your inventory,            doesn’t catch fire.
HOMEOWNERS INSURANCE GUIDE                                                     ALABAMA DEPARTMENT OF INSURANCE

                                    •   You are required to protect your        tractor meet with you and the
Making a claim                          home from further damage. For           insurance adjuster.
                                        example, you may need to
•   Call the insurance company          board up your home or use
    and speak to the claims person      tarps if there was damage to     •      You must document your loss;
    (adjuster). The adjuster will       the building, or clean up water         receipts and pictures will help.
    probably want to meet with you      from a backed-up drain.
    at your house to inspect the
    damage. Jot down notes and     •    Don’t feel rushed or pushed to     •    If you and the insurer disagree
    keep track of the dates of any      agree with something you                about the value of the claim,
    conversations you have with         aren’t comfortable with. It             check your policy for an ap-
    your agent or adjuster.             might help to have your con-            praisal clause.


I live on the coast: what about wind-related coverage?
  Many insurers have excluded wind coverage in Mo-     wind-related coverage, as it is required by your mort-
bile and Baldwin counties, forcing consumers to fine   gage company and is a important protection of your
coverage through non-traditional means, such as the    property.
surplus lines market or the Alabama Insurance Un-        Many agents in the coastal counties are qualified to
derwriting Association (AIUA).                         write surplus lines policies or policies with the AIUA. If
  Ask your agent whether your policy covers wind-      they are not, then ask your agent to refer you to one
related events. If your policy does not cover wind-    who is, or engage in a search of your own to find
related events, then ask your agent help you obtain    such an agent.



            Alabama Department of Insurance
                                 … how we work for you
We can answer questions about any type of insurance.

We can research whether an agent or a company has had disciplinary
issues.

We can investigate your complaints regarding an agent or a company.

If you have an old life insurance or burial policy and you cannot locate
the company, we can help find that company, or its new owner.

We enforce state laws and regulations regarding insurance companies
and their agents.

We examine the finances of insurance companies to ensure that they
are financially sound and able to pay claims.