As a consumer, you have likely been exposed to all kinds of different scenarios where insurance coverage has been either required or recommended.
Whether you are just thinking of buying a place or you have already signed the dotted line, one of the most important types of insurance coverage you will acquire is, of course, homeowners insurance.
At BRZ we work with some of the best homeowners insurance companies, such as Plymouth Rock and Universal Home Insurance, and have put together countless homeowners insurance quotes while guiding a plethora of clients through this process.
Below, we have gathered some of the most common coverage questions regarding purchasing homeowners insurance in Massachusetts:
1. What does homeowners insurance cover, exactly?
- Dwelling, i.e. your house. A homeowners insurance quote includes the amount it is estimated you will need to rebuild your home in case it is completely destroyed.
- Other structures: coverage for any physical structures on your property that are not attached to your house (e.g. a garden shed, a pool, or a detached garage).
- Loss of use: coverage that gives you the ability to stay in a hotel or rental home and provides assistance with living expenses in case your home becomes unlivable due to a variety of causes such as natural disasters.
- Personal property: coverage for the total value of your belongings ranging from furniture to electronics and personal items.
- Personal liability: coverage for legal fees and medical expenses in case you are at fault for someone being injured and you get sued as a result.
- Medical payments to others: coverage for medical bills if a guest or neighbor is injured while on your property.
2. What is the difference between personal liability and medical payments?
- Both personal liability and medical payments to others coverage appear to afford you protection in cases of injuries and accidents. However, they actually differ significantly in terms of what they provide. Medical payments is designed for smaller claims and covers you in cases where a guest is injured at your house regardless of whose fault it is. This coverage has a low limit (it often ranges from $1,000-$5,000), but it will take care of less serious situations and will therefore still help you stay out of possible lawsuits. Personal liability is meant to cover you in cases where you are responsible for physical injury or property damage so it has much higher limits (a $100,000-$500,000 range). It even protects you when you are not at home since accidentally causing damage that results in significant medical or legal fees may mean you could risk losing your home. This type of coverage extends to members of your family that live in the same house. Your home is likely your most valuable asset so it is highly recommended that you have both types of coverage in order to sufficiently protect it if an unfortunate situation does take place.
3. How do insurance companies come up with a homeowners insurance estimate?
- Insurance carriers work with your agent to provide a homeowners insurance quote for the types of coverage mentioned above depending on the amount of risk they believe you are exposed to, i.e. how likely they believe you are to file a claim. That risk assessment process is called underwriting and it helps ensure your coverage is appropriate for your level of risk. The higher the risk, the more likely you are to have a higher premium although a number of other factors will affect that final number as well. For example, choosing a higher deductible, which is the amount that will come out of your pocket in case of loss, will translate into lower premiums in the meantime.
4. How much does homeowners insurance typically cost?
- This one is a hard one because an accurate answer would depend on the interaction between a variety of factors, from your home’s zip code, to your marital status, your choice of deductible, and your past claim history. A homeowners insurance calculator may provide a ballpark figure but to get a better idea of a range of prices that are applicable to you, your finances, and your lifestyle you should contact an agent and request comprehensive quotes.
5. Can I bundle my homeowners insurance and my auto insurance?
- Yes! Whether you should do so may depend on being able to get a decent price for both types of policies as well as a discount, i.e. if your premium for the bundled policies is more economic than paying for separate ones. Another reason to bundle may be that you own a high-risk home which some carriers are reluctant to take on so by buying an auto policy in addition to homeowners, you give them more reason to accept you as a client. If you own a boat, you can even add a boat to your bundle and hit three birds with one stone which lends the extra convenience of paying one carrier for all policies. Whether you bundle or not, at BRZ we can assist you with procuring all three types of policies and customize them to your needs. Whenever you make changes to a policy or change carriers, caution should be exercised during the transition so that you don’t have coverage lapses, which can affect your new rate, or face cancellation fees so employing the help of an experienced agent will help make the process smoother and more cost-effective.
6. A friend suggested I need an umbrella insurance policy on top of my homeowners insurance. What is an umbrella insurance policy?
- It is sort of like insurance for your insurance. Also known as extra or excess liability insurance, it kicks in to provide coverage that goes beyond the scope defined on your regular home, auto, or boat insurance particularly if you are at an elevated risk for facing a lawsuit. For example, if you get into a particularly expensive car accident where you are at fault and you exhaust the limit of your auto policy, the umbrella policy will help cover the additional costs. Since this kind policy covers scenarios or items which are often not listed on a base policy, it is appropriate for individuals who own multiple or very high value assets (e.g. an expensive home that is worth much more than your liability policy’s limit), those who own items that carry injury risks (from trampolines to dogs), or who take part in activities with an elevated risk of lawsuits (e.g. volunteering or being a landlord). To that end an umbrella policy can additionally protect you against invasion of privacy, slander, libel, and vandalism. Whether you should purchase this kind of coverage to complement your homeowners policy will therefore depend both on whether you fit any of the aforementioned criteria and on your budget so it is best to discuss it with your insurance agent in order to make an informed decision.
Our team knows that insurance choices have a lasting impact on your family’s financial well being so you can never ask us too many questions when it comes to obtaining the right coverage.
Give us a call or, even better, visit us for a cup of coffee and we will answer every single one of them.