Homeowners Insurance

Homeowners Insurance

Homeowners insurance is a package policy. This means that it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. This includes damage caused by household pets.

Damage caused by most disasters is covered but there are exceptions. The most significant are damage caused by floods, earthquakes and poor maintenance. You must buy two separate policies for flood and earthquake coverage. Maintenance-related problems are the homeowners’ responsibility.

Based in Brentwood, TN Johnston & Associates Insurance understands the home insurance needs of our customers. We’ll work with you to estimate the replacement cost for your home and to adjust your policy limits from time to time as needed.

It is critical that you provide us with accurate, updated information about your home and contents. If your dwelling limit accurately reflects your home’s true replacement cost, some companies will pay more than the limit if a covered loss is greater than the limit on your policy.

Once a review of your home and possessions indicates you are properly insured, it’s a good idea to reexamine your coverages and limits from time to time, especially whenever you make additions or improvements.

Johnston & Associates Insurance can help you re-evaluate your insurance needs, just give us a call at (615) 716-2123 to speak with one of our agents.

 


 

Homeowners Insurance FAQs

What is Homeowners Insurance?

Homeowners insurance provides financial protection against disasters. A standard policy insures the home itself and the things you keep in it.

Homeowners insurance is a package policy. This means that it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. This includes damage caused by household pets.

Damage caused by most disasters is covered but there are exceptions. The most significant are damage caused by floods, earthquakes and poor maintenance. You must buy two separate policies for flood and earthquake coverage. Maintenance-related problems are the homeowners’ responsibility.

Why do I need Homeowners Insurance?

It’s really all about protecting yourself financially if something unexpected happens to your home or possessions. That’s important because chances are your home is likely one of your largest investments. Consider the following:

  • If your home was destroyed by fire or damaged by a natural disaster, you’d need money to repair or replace it.
  • If a guest in your home is injured, liability protection and medical coverage help pay expenses.
  • If you are a victim of theft and vandalism, it can reimburse you for your loss or pay for repairs.
  • If you are still paying for your home, your lender will require insurance.

It is important to know that homeowners insurance is meant to cover unexpected damage, not routine maintenance. Be sure to read your policy so you know exactly what’s included and what is not. Have questions about your insurance? We’re here to help you understand what is covered.

What coverage is included in a standard Homeowners Insurance policy?

A standard Tennessee homeowners insurance policy includes four types of coverage:

  • Coverage for the structure of your home
  • Coverage for your personal belongings
  • Liability protection
  • Additional living expenses in the event you are temporarily unable to live in your home because of a fire or other insured disaster

Coverage for the Structure of your Home and Other Structures
This part of your policy pays to repair or rebuild your home for damage caused by most common risks. Typically, damage caused by fire, wind, hail, or lightning is covered under this part of the policy. Insurance for flood, earthquake, water and sewer backup damage must be purchased separately.

Most standard policies also cover structures that are detached from your home such as a garage, tool shed or gazebo. Generally, these structures are covered for about 10-20 percent of the amount of insurance you have on the structure of your home.

When deciding on the limits of your coverage – the maximum amount the insurance company can pay – make sure that your policy covers the cost to replace the structure, not market value or just what you still owe on it.

Coverage for your Personal Belongings
Whether the contents of your house – furniture, clothing and other items – are stolen or destroyed in an insured disaster such as a fire, they are covered under this part of the policy. Most companies provide coverage for about 50-75 percent of the amount of insurance you have on the structure of your home.

Conduct a home inventory to determine if that’s enough coverage for your personal belongings. If the amount is insufficient, or if you have particularly valuable items like fine art and jewelry, you may need to purchase additional coverage, called a floater.

Additionally, most homeowner policies contain internal sub-limits for such items as guns, furs and silverware that can limit the amount of recovery. Also, most policies limit contents coverage for property kept at an additional residence. Buying specific coverage may be the best option for maintaining full coverage in these instances.

Standard homeowners policies also provide limited coverage for trees, plants and shrubs as well as unauthorized use of your credit cards.

Liability Protection
Liability protection covers you against claims or lawsuits for bodily injury or property damage that you or your family members negligently cause to other people or property. It also pays for injury or damage caused by pets.

So if your son, daughter or dog accidentally ruins your neighbor’s valuable rug, you’re covered. But if they destroy your rug, your liability coverage does not provide compensation.

Your policy also provides medical coverage. In the event a friend or neighbor is injured in your home, he or she can submit the medical bills to your insurance company. Expenses are paid without the injured party filing a liability claim against you. Liability coverage pays for both the cost of defending you in court and any court awards up to the limit of your policy. This coverage applies anywhere in the world.

You can also purchase an umbrella or personal catastrophe liability policy to provide broader coverage for your home, including claims against you for libel and slander, and higher liability limits.

Coverage for Additional Living Expenses
If the damage from a fire, storm or other insured peril forces you out of your home, this part of the policy covers the expenses incurred while your home is being rebuilt. Many policies provide coverage for about 20 percent of the insurance on your house or limit coverage to expenses occurred over a twelve month period. Our policies do not permit an increase in this coverage.

If you rent out a portion of your house, additional living expenses coverage also reimburses you for the rent that you would have collected from your tenant if your house had not been damaged or destroyed.

How Much Home Insurance is Enough?

The cost to rebuild your home is its replacement value. This can be very different from the estimated market value or actual purchase price. In most cases, it costs more to rebuild the home you own than to buy a new one.

What are some common additional Homeowners Insurance coverage options that I should consider adding to my policy?

Replacement cost
The policy pays the cost of rebuilding or repairing your home, or replacing your possessions without a deduction for depreciation.

Sewer or drain water back-up
This insures your property for damage caused by the back-up of sewers or drains. Water back-up may not always be included in a policy. Check with us for more details.

Umbrella or personal catastrophe liability
This is a way to add more liability protection and broader coverage to your standard policy.

Earthquake insurance
Homeowners policies typically don’t automatically include earthquake insurance, but it can be purchased as an optional endorsement.

Flood insurance
Like earthquake insurance, flood insurance is excluded from most homeowners policies and must be purchased separately through the National Flood Insurance Program.

Coverage for valuables
If you own expensive jewelry, electronic equipment or collectibles, you may want to purchase additional coverage such as an inland marine policy. Although these items are protected by your policy, coverage for theft or loss is limited.

Identity protection
Identity recovery coverage is designed to help you restore your credit in the event of identity theft.

What are some other important questions I should ask before purchasing a Homeowners Insurance policy?

There are many questions to consider, but these are a few of the most important questions to ask your agent.

  • How much will it cost to rebuild my house and replace my belongings if they are damaged or destroyed? We can help talk you through your home’s features and the things you own so you can make an informed decision about coverage.
  • Does the insurance company have a good reputation for customer service? Is it known for paying claims fairly and promptly?
  • What discounts are available? Ask us about multiple policy, security system, and fire resistance discounts.
  • What’s the process for filing and settling a claim?
  • Who do I call and what happens after I file a claim?
  • Because everyone’s needs are not the same, it is best to consult with us to help assess your needs and find the insurance policy that is right for you.

What steps can you take to reduce the danger of being seriously underinsured?

  1. Call Johnston & Associates Insurance. If you have questions or concerns about the limits in your policy, ask us to show you how those amounts were calculated. This will also give you an opportunity to make us aware of any overlooked information.
  2. Read your policy. Certain property, such as jewelry, and certain perils, such as earthquake or flood, is better insured separately. Knowing what is covered and for how much will help you insure properly. If there is anything in your policy you don’t understand, contact Johnston & Associates Insurance at (615) 716-2123 and ask for an explanation.
  3. Review. At each annual renewal of your policy, you receive a new Policy Declarations page showing limits of coverage and optional coverages. Review this information. If you do any significant remodeling or add a family room, extra bedroom or bathroom, etc., tell us about these changes so your coverage limits can be adjusted to cover the improvement.
  4. Consider carefully whether your policy provides all the protection you need. Does it provide coverage for extra costs resulting from building code changes? Does it automatically increase coverage limits annually to keep pace with inflation? Does it provide additional funds if the cost of rebuilding your home exceeds the policy limits?

What else do I need to know before purchasing a Homeowners Insurance policy?

There are several other thing that you need to make sure you know:

  • Will your insurance company stand behind agreed upon repairs after a claim? Some companies are willing to put this guarantee in writing.
  • Does your policy include replacement cost coverage for contents (clothing, furniture, appliances, and other personal property inside your home)? If not, you can add it by endorsement. The cost is small, the protection valuable. Replacement Cost Coverage pays for losses to your possessions at the cost of brand new items. Without this option, a covered loss to your personal possessions would be depreciated by their age and condition, reducing the size of your claim settlement.

If you have an art collection, antique furniture, jewelry, or other valuable possessions, talk to your agent about supplemental coverages, such as fine arts or scheduled property endorsements, to adequately protect your investment in these items. The cost is modest for the extra protection, and often the deductible is waived.

Consider whether you should have more coverage for personal property (contents) than your policy provides. Personal property coverage is usually 70% of the coverage limit for the structure. Your limit may be lower than 70%. Supplemental protection is available for a small additional premium.

Inventory your home. Prepare an inventory of personal property items, update it periodically, and keep it in a safe place outside your home, such as a safe deposit box at your bank. It will save you hours of time trying to list everything damaged or destroyed if you need to make a claim. It will also help ensure you don’t forget some items. Johnston & Associates Insurance can advise you on ways to simplify the job of preparing a personal property inventory such as videotaping each room with descriptive information on the sound track.

Do I also need Personal Liability Insurance?

Besides making sure you have enough protection to cover possible damage to your own home and contents, you should also evaluate your exposure to liability risks. These result from damage to the property of another, or injury to a person, not a member of your household, for which you can be responsible.

In recent years it’s become common for homeowners to be sued for injuries or damages to others, even when there is no evidence of negligence by the homeowner. The reality today is if you have any appreciable assets, you are exposed to the risk of being sued. Even if you ultimately prevail in court, your legal fees and the months or years of worry and uncertainty can be a terrible burden on you and your family.

The Personal Liability coverage provided by your Tennessee Homeowners Policy usually provides a limit of $100,000 or $300,000. We recommend increasing this protection with a personal umbrella policy. Not only will it increase your personal liability, but also your auto liability. Limits are available from $1 million to $10 million and beyond. The cost of this coverage is usually very reasonable.

Keep in mind that Tennessee can require certain minimum levels of coverage. The right coverage for you is unique – talk to Johnston & Associates Insurance today to find out how to get the best price and value on home insurance for you.

What optional or additional coverages should I consider?

Your home is unique and so are your protection needs. Some optional coverages you may choose to add include:

  • Incidental business occupancy
  • Earthquake coverage
  • Scheduled personal property such as jewelry, fine arts, furs, and electronic equipment
  • Identity recovery coverage/identity fraud protection
  • Personal computer coverage
  • Electronic data restoration
  • Dwelling and other structures siding and/or roofing restoration coverage
  • High value home insurance: additional coverage for homes valued over $50 Did you know we can provide coverage for all computers in your home?;We can cover your laptop or computer for any type of loss other than mechanical breakdown for about $2 a month*, no deductible.

*Endorsement on Homeowners or Renters Policy. $2/month for computers valued up to $2400.

How can I lower my Homeowners Insurance premium?

Insurers frequently award lower rates to homeowners who guard against theft, accidents and other losses. And companies may provide discounts to premium for multiple-customers (home and auto). Here are some things you can do that generally qualify for lower premiums:

  • Secure your home with dead bolts and window locks.
  • Install a security system with outside signal and connection to local police.
  • Install and maintain smoke detectors.
  • Install a sprinkler system for fire.
  • Install a fire alarm that automatically alerts the local fire department.
  • Purchase your auto and home insurance from the same company.

What kinds of records are needed to substantiate a Homeowners Insurance claim?

It is recommend that you keep a booklet detailing the items or a videotape of your personal property. Having a complete inventory record at the time of loss could save you thousands of dollars because no one remembers everything, and unless written down, lost items will go unclaimed. The booklet should be kept in a safe place, preferably not at home. Keep it in a safe deposit box or with your insurance agent. It is also a good idea to retain all bills for major purchases and additions to the structure of your home. These could serve as proof of purchase in the event of a claim and should also be kept in a safe place. Finally, take pictures of or videotape all these items. Lay china and silverware on a table so that the picture will show the number of pieces and other details such as the design. Keep the pictures and all receipts in a safe place.

What do I do if I have a property claim?

If anyone is injured, immediately render any possible first aid assistance and call emergency services. Take appropriate steps to avoid further damage to the property. Promptly report the claim to your insurance agent.

What should I do if I have a loss?

  • Report the loss to your insurance agent as soon as possible, providing date of loss and description.
  • Take photos or videotape of the damage.
  • Keep records of your expenses for emergency or temporary repairs. Separate the damaged items from the undamaged items. The insurance company adjuster will want to inspect the damaged items, so don’t dispose of them without the adjuster’s consent.
  • Make a detailed list of all damaged or lost property, including when and where they were purchased. If possible, provide the original receipts for each item.
  • Obtain estimates for repairs and/or replacement of the damaged or missing items. Should the loss involve theft or vandalism, contact your police department immediately.

What does “guaranteed replacement” mean?

In the event your home is completely destroyed by a fire, you’ll want to be sure it’s replaced with a home that has the same square footage, updates, and features. In Nashville, frequently homes are either over-insured or under-insured. Before we write your policy, we’ll recalculate the replacement cost of your home using the most recent construction data for your zip code. Once we establish the updated replacement cost, we’ll design a policy that includes Unlimited Guaranteed Replacement. This policy endorsement guarantees that your new home will be rebuilt with the exact feature specifications of your current home.

This also includes Inflation Guard, which allows your dwelling coverage to keep pace with inflation from year to year.

What is replacement cost?

In the event of a personal property (or contents) claim, insurance companies will settle in one of two ways: Actual Cash Value (ACV) or Replacement Cost (RC). Actual Cash Value is the depreciated value of your property, which results in an undesirable settlement. Replacement Cost provides coverage for the current market value of your items. For example, if you bought a sofa ten years ago for $1000, that same sofa may be worth $300 today, which is what you’ll receive in the event of an ACV settlement. Replacement Cost allows you to buy a new item in today’s marketplace. Your $1000 sofa may now cost $1300 to replace today, which is the amount you’ll receive with a Replacement Cost settlement.

All of our homeowner polices contain this important endorsement.

Do I need Building Code Upgrade coverage?

Your homeowners policy does not automatically include Building Code Upgrade Coverage. For example, in the event of a total loss, an older home that has not had upgrades to its electrical, plumbing, heating, roofing or structure, will be required to be rebuilt with those costly upgrades. For example, many counties now require new homes be built with sprinkler systems. You, the insured, will be required to pay for these upgrades – unless you have Building Code Upgrade Coverage.

It’s usually about $30 per year.

What is a wind and hail deductible?

A wind/hail deductible is a 1 or 2% deductible that more and more insurance companies are including in their Tennessee homeowner policies. It is a significant change to the homeowner insurance policy in that it reduces or almost totally eliminates an insurance company’s liability to you, the policyholder in the event of a major wind or hail claim. It works this way – if your dwelling is insured for $300,000, your deductible would be $3000 with a 2% deductible, that amount would be $6000. These are significant out of pocket expenses to you, the policyholder. So when buying your next homeowner or condo owner’s policy, make sure you ask about this as more and more of the larger companies are including these mandatorily.

What coverage is excluded from my Homeowners Insurance policy?

Typically, an insurance policy is only as good as its exclusions. It’s always a good idea to read through your Policy Exclusions, because if it’s not stated here, it’s covered. A typical homeowner policy will include some or all of the following exclusions:

  1. Earthquake insurance, unless you purchase this coverage by special endorsement.
  2. Flood insurance, unless you purchase this coverage by special endorsement.
  3. Coverage for damage or misplacing of Personal Property, unless you purchase this coverage by special endorsement.
  4. Bodily injury or property damage caused by an insured to himself or to another named insured, or to an insured’s property, whether accidental or intentional.
  5. Bodily injury or property damage caused by a named insured, with the intent to cause such damage.
  6. Bodily injury or property damage arising out of willful violation of the law.
  7. Bodily injury or property damage arising out of business pursuits of a named insured, typically covered under a business policy.
  8. Bodily injury or property damage arising out of renting the property to another named insured.
  9. Bodily injury or property damage arising out of the rendering of professional services, such as medical services, architectural services, legal services, installing, accounting, beauty, designing or consulting.
  10. Bodily injury or property damage arising out of the ownership or operation of an aircraft.
  11. Bodily injury or property damage arising out of the sale, manufacture, or use of a controlled substance.
  12. Bodily injury or property damage arising out of the discharging of any kind of thermal irritant, pollutant, or contaminant, including smoke, vapors, soot, fumes, acids or chemicals.
  13. Bodily injury or property damage arising out of a communicable disease.
  14. Suits for libel, slander, or defamation of character of a named insured.

What is Scheduled Jewelry Coverage?

Your homeowners policy does provide limited coverage for jewelry, subject to your deductible, usually with a $2500 limit. In addition, how the jewelry is covered is also restricted. For example, your homeowner policy restricts coverage for jewelry to cover only fire and theft loss. Scheduled jewelry coverage is All Risk coverage. This includes mysterious disappearance, damage, or a missing stone, with a $0 deductible. Higher deductibles can be used to reduce the cost.

What is Inland Marine Insurance?

Inland Marine insurance covers the transportation of specialty items such jewelry, fine arts, or special collections such as stamps, guns, or trading cards. This specialty policy removes restrictions that you have on a basic homeowners policy, such as:

  • Damage to a painting that is bumped and rips
  • Loss, misplacement, or damage of jewelry
  • Missing stones from jewelry