- Structure- This policy pays to repair or rebuild a home if it is damaged or destroyed by fire, hurricane, hail, lightning or named incidents listed in the policy. It will not pay for damage caused by a flood, earthquake or routine wear and tear. Very important that you keep normal maintenance of the property. Most policies also cover structures that are not attached to a house such as a garage, tool shed or gazebo.
- Personal Belongings – Coverage for personal belonging includes furniture, clothes, sports equipment and other personal items are covered if they are stolen or destroyed by fire, hurricane or other insured disaster. Most companies in California Homeowner’s insurance policy offer 50% to 70% amount of insurance on the structure of a home. This also includes off-premises coverage. Which means that belongings are covered anywhere in the world, unless the policyholder has decided against off-premises coverage. Expensive items like jewelry, furs and silverware are covered, but there are usually dollar limits if they are stolen. To insure these items to their full value, individuals can purchase a special personal property endorsement or floater and insure the item for its appraised value. This generally will require an appraisal. Trees, plants and shrubs are also covered under California Homeowners Insurance Policy generally up to about $500 per item. Perils covered are theft, fire, lightning, explosion, vandalism, riot and even falling aircraft. Plants are not covered for damage by wind or disease.
- Liability – Liability covers against lawsuits for bodily injury or property damage that policyholders or family members cause to other people. It also pays for damage caused by pets. The California Homeowner’s Insurance policy pays for both the cost of defending the policyholder in court and any court awards—up to the limit of the policy. Coverage is not just in the home but extends to anywhere in the world. Liability limits generally start at about $100,000. * Note there are often times are exclusions for exotic pets and dogs ie. pit bulls, dobermans etc. Make sure you fully disclose all of your pets!
- Additional Living Expenses – This covers the additional costs of living away from home if a house is inhabitable due to damage from a fire, storm or other insured disaster. It covers hotel bills, restaurant meals and other living expenses incurred while the home is being rebuilt. Coverage for additional living expenses differs from company to company. Coverage usually ranges in time period for example “reasonable expenses ” for 24 months or in other cases a designated dollar amount.
Know What Homeowner’s Policy You Are Buying
Understanding how the policy is brown up in the coverage sections mentioned above. Now you need to understand what you need to look for in a policy. There are two primary types of homeowner’s policies. There are H03 and H05 polices. What does that mean. This is an insurance designation that lets both the agent and the consumer know the situations or (perils ) you insurance will or will not cover an incident.
Definitions To start with need to define some insurance terms so that it is understood where the policy coverage is being purchase.
Open Peril Policy- offers cover against almost all forms of risks with the exception of names exclusions.
Names Peril Policy- names specific risks for which the insurer provides coverage. If the property damages occur due to any other peril other than those mentioned in the policy, the insurers deny paying for the loss.
H03 Policy Homeowner’s Policy Person needs to understand the HO3 policy provides open perils policy when it offers coverage against the property structure. The insurer will compensate for the damages to the structure of the insured building or residence, under any circumstances. However, if the damage is caused by an excluded peril, the insurers are not liable to pay for it.
The HO3 policy provides a named peril policy when it offers coverage for the contents of the insured property. Loss or damages to the personal belongings of the homeowner and the home content will only be covered, if those have been caused by the specific perils as pointed out in the policy.
- Fire or Lightning
- Falling Objects
- Volcanic Eruption
- Windstorm or Hail
- Riot of Civil Commotion
- Damage Caused by Aircraft
- Vandalism or Malicious Mischief
- Damage due to weight of Ice, Snow, or Sleet
- Sudden & Accidental Tearing Apart, Cracking, Burning, or Bulging
- Sudden & Accidental Damage from Artificially Generated Electric Current
- Accidental Discharge or Overflow of Water from Plumbing, Air conditioning etc.
HO5 policy acts like an open perils policy, and offers open perils coverage on both the home content and structure. Thus, no matter what kind of damage affects the insured property, this form of California Homeowner’s Insurance will offer protection. Coverage will only be denied if the cause behind the loss or damage is any one of the excluded perils, specifically mentioned in the policy.
Excluded Perils for Both H03 and H05 Homeowner’s Policy The exclusions for both H03 and H05 are typically very similar. Here is example of exclusions that you should be use as a guideline as each policy is different.
- Power failure
- Water damage due to flood
- Pets and other animals, insects and pests
- Industrial pollution or smoke
- Earth movement (earthquake)
- Water damage due to flood
- Deterioration due to weather conditions, that aggravates other excluded causes of loss
- Nuclear Accidents
- Settling, wear and tear
- Act of negligence
- Actions taken by government and other associations
- Legal action due to lack of proper permits, defective construction, design or maintenance
- Theft or Damage from vandalism in vacant dwellings or in dwellings under construction
Which Direction Should You Go?
Questions you should ask to understand what is best for you in making your home insurance purchase:
- Is it worth paying a little more for an H05 policy versus and H03? In most cases the cost is surprisingly minimal. Definitely something you would want to look into. As your personal property coverage is expanded significantly!
- Do I have items that are high value that have limited coverage jewelry, furs, collections? This is something that most people over look, limits on jewelry especially in the event of a break in you can take a hit and it would only be covered in some case for for the limits designated on your policy. Look to get additional coverage through and endorsement or schedule the item(s) to make sure that you are covered.
- Understand water coverage! Most people think that are covered for water damage. The answer is with California Homeowner’s Insurance you are partially. Broken pipe generally covered . Flood not covered, would require a separate policy, water back up not covered typically some higher end polices offers coverage . Water backup is water backing up from toilet or sink. This has bacteria and can be a costly claim look into it.
At the end of the day it comes down to you and what you value and what you think you will need in your California Homeowner’s Insurance. The goal is to go in and be educated and find the polices that make the most sense to you.