Am I Covered? 8 Things You Need to Know About Homeowner’s Insurance

April 7, 2019

According to the National Association of Insurance Commissioners, about 85% of homeowners have homeowners insurance policies.

These policies cover a variety of issues, emergencies, and accidents. But what you may not know is that these policies don’t encompass everything.

For example, in Florida, flood insurance must be purchased separately.

Homeowners’ insurance policies are also different based upon the size or age of your home, the assets you have, and the area where you live. Even things like pets and their breeds can affect your coverage limitations and costs!

Of all the policyholders in the world, only 48% of customers say that they fully understand their homeowner’s insurance policy.

That number is far too low.

Whether you’re considering a homeowners insurance policy, browsing through options, or ready to purchase protection for your home, here are eight things you need to know.

1. Not All Homeowners Insurance Policies are Created Equal

Knowing what to look for in homeowners’ insurance is half the battle.

As you start researching, the most important thing to note is that there are different policies available to you, especially depending upon where you live. In Florida, here are the different types of policies you can purchase.

HO-1 Basic

This is the simplest type of home insurance. Although it’s not as prevalent as the others, it covers more specific events: fire, storms/lightning, theft and vandalism, damage from vehicles, explosions, riots, air crafts, and even volcanic eruption!

The specifications of the policy can be found on the form. Be sure to read it carefully to know what’s covered and not covered.

HO-2 Broad

An extension on the HO-1, this policy covers all the prior events plus damage from ice/snow, issues with AC or heating systems, sudden breaks to pipes or damage from electrical issues, falling objects, and your personal belongings.

HO-3 Special

This is the most common form of homeowners’ insurance policy available. Rather than highlighting specific events that are covered and leaving out the rest, this policy covers the home as a whole—both structure and belongings—and has exclusions that are not covered.

HO-5 Comprehensive

This type of coverage is by far the most in-depth. It covers all the HO-3 policies (all accidents or unexpected events except what’s specifically excluded) but the drawback is that there’s less ability to drop or make exceptions to the coverage.

You also are restricted by the coverage limits and can’t necessarily make changes, even when certain sections don’t apply.

2. You Have to Find the Right Insurance for You and Your Family

When you’re ready to buy home insurance, it’s important to think about your family needs. Some factors to consider are family and home size, whether or not you have a home office space, the area you live in, any assets you have, the cost you would incur to replace all your belongings/rebuild your house, the cost of liability in case you are to be sued, and living expenses if you lose your home.

There are also different types of insurance: cash value, replacement cost, and guaranteed extended replacement cost coverage, which will protect your home, belongings, and assets at different levels.

Cash value coverage gives you the market value to repair or replace anything that was damaged (property or possessions). Replacement costs do not include depreciation, so you could potentially fully replace what was lost. Guaranteed/extended is the highest protection, even if the emergency claim is higher than the limit of the policy. However, this policy is typically the most expensive.

3. It’s Important to Invest in Replacement Value Insurance

It’s important to consider all types of insurance for your property and belongings, but the most commonly selected (and encouraged!) is Replacement Cost Coverage.

Replacement Cost Coverage is coverage that replaces your belongings in an event of emergency or accident. Companies that offer this type of coverage will replace your personal belongings without deducting for appreciation. This coverage does have policy limits, though, so it’s important to keep that in mind when making a claim.

4. Consider Purchasing Flood Insurance

It’s important to consider flood insurance as well. This is often (if not always) something outside of your home insurance policy.

You can learn more about what flood insurance actually covers and what’s available to you as a Florida resident right here.

5. Consider Buying an Umbrella Policy

An umbrella policy is an insurance policy that can cover any and all gaps in your other insurance coverage. It’s extra liability insurance to protect for the worst-case scenarios.

You’re not required by law to purchase an umbrella policy, but it can be a good option to consider, especially because it covers damages to others’ property, as well as legal costs for defending yourself.

6. Learn How Your Claims Process Works

The claims process can be different depending on the insurance company. Before purchasing a homeowners’ insurance policy, be sure to talk to your agent and have him or her explain how claims are handled.

You’ll also want to know how long the turnaround is for payments and/or replacements, the method for payment, and whether or not there’s a deadline for making a claim after a life-changing event.

7. You Need to Take Inventory of Your Home and Belongings

Before purchasing a policy (and updating from that point forward) it’s important to take inventory of your home and belongings.

Walk through each room in your house and record valuables and their estimated prices. Make a copy of this document online, or in an office space outside of your home. This will help you to verify and keep track of your items and their worth. It will also be important to have this information in the event of a claim.

8. Keep Contact with Your Agent (Especially In/After Emergencies)

Your coverage amounts and claim costs will shift. Be sure to not only keep your policies and inventories up-to-date but keep in contact with your agent.

You don’t want any surprises, especially when it comes to something serious like your home and family protection!

Now You Can Start Protecting Your Home

A homeowners insurance policy is one of the most important policies you can purchase to protect you and your family. To contact us and get a quote, please fill out your information on this page.


**This blog provides a brief overview of the terms and phrases used within the insurance industry. These definitions are not applicable in all states or for all insurance and financial products. This is not an insurance contract. Other terms, conditions and exclusions apply. Please read your official policy for full details about coverage. These definitions do not alter or modify the terms of any insurance contract.