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.