Shopping for Homeowners Insurance

Homeowners Insurance products have been in place since the early 1900's. The products have changed over the years but have remained constant over recent years. The Insurance Services office (ISO) has developed industry standards which must be followed by all insurance companies that do business in America. The standards have been established to protect consumers from insurance company contracts and exclusions. Companies are required to give the ISO standard coverage or better; they can never take away coverage.

Keeping the above in mind the following Homeowners Policy Forms are available: DP1,2, & 3. These three policy forms are the least used and offer the most restrictions. The DP1 is a basic fire policy. Some other coverage can be added but only by endorsement. The DP2&3 simply add a few more covered losses in addition to fire but are both stripped down policies.

HO1,2 & 3 are the newer policy forms which come as a packaged. They give coverage for your Dwelling, Other Structures, Personal Property, Loss of Use, Personal Liability and Medical Payments. All items are included in the package which makes it much easier to shop for homeowner's insurance. HO1 and HO2 actually list the perils that they insure. In other words, for your home to be covered in case of a loss, the Peril must be found in the policy jacket. HO3 is the most comprehensive of all the policies and it insures all Perils except for those specifically excluded. Since your home is, in most cases, your largest investment, it is a good idea to always go with the HO3.

In addition to the policy forms there are many endorsements, actually to many to go into here. The most often used are the Replacement Cost (RC) on Contents and Scheduled Personal Property endorsements. RC removes the depreciation factor from your policy. For example, in the case of a loss, if your 10 year old dishwasher is damaged and you do not have RC you will get no money to replace the item since the life expectancy is ten years. With RC you will be given the amount of money needed to purchase a new dishwasher regardless of the age of your damaged one. This is really nice when you are trying to get back on your feet after a loss. Finally, remember that there are exclusions and restrictions on every policy including the HO3. To cover Antiques, Jewelry, Guns or any other collectibles they must be scheduled separately. These standard policies are not intended to cover these items beyond specified amounts. You will have very little coverage for these items on your HO3. (See http://www.fossremodeling.com for the life expectancy of your household items).

Now that you have a basic knowledge of the Homeowners products take a good look at your policy and get some quotes. You will find that you can get a lot covered for pennies.

Mike A. Zubero may be contacted at zubero@msn.com

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