Homeowners insurance has evolved through the years to include numerous different forms that are either standardized or specifically manuscripted by an insurance company. Insurance Service Office, Inc. (ISO) is a national organization that provides industry-related information to companies and also provides standardized forms that are utilized in the industry in an effort to create uniformity. A manuscript form is a customized form that many companies utilize and may have special coverages or limitations. In general the homeowners policy provides comprehensive coverage for your personal insurance needs.
Louisiana Homeowners Insurance
Key Items to the Homeowners Form
Replacement Cost: This represents the typical cost to replace an item with like kind and quality. It is provided without depreciation being applied. Many policies utilize actual cash value as the valuation method. While this method is truly the most proper way to indemnify policyholders for a loss and to return them to the position they were in prior to the loss, it may result in additional out-of-pocket funds to upgrade.
Deductible: Your deductible is the amount of the claim that you pay before the insurance company begins to indemnify you for a loss. In coastal areas like South Louisiana, we have multiple deductibles that apply. Wind and hail deductibles apply to claims and they are typically a percentage of the building coverage (coverage A). There are multiple types of wind and hail deductible:
- Wind and hail the deductible – applies to all event
- Named storm deductible – applies specifically to named storm and not limited storm activity
- Hurricane deductible – applies when hurricane status applies to a storm that has hit the coast.
One misconception that occurs is that the percentage is a percentage of the claim. The percentage deductible is a percentage of the total amount that the building is insured for and it is the first amount that is assumed by you after a claim has been adjusted.
Cause of Loss
There are three basic types of coverage that are utilized in a homeowners policy. The three types are special form, broad form, and basic form. While each provides very good coverage, the best form is the special form.
- Special form Transfers the burden of proof to the insurance company, and in general states that a peril is covered unless it is specifically excluded. Of course, you still must have evidence of the loss being covered and proof that it was caused by something not excluded. In addition, you may pick up coverage for items like theft, and water damage.
- Broad form Coverage is also available and provides you with the basic perils as well as extended coverage for many other causes of loss. This is a very good form and will meet most individual’s needs.
- Basic form An old-school form that provides the basic coverages as well as extended coverage. It is designed to be a fire policy with extended coverages that provides for stated catastrophic events. Some items that typically are not covered are theft, water damage, and wind-blown rain. If you can afford a special form it is always recommended that you purchase one.
Homeowners Liability Coverage
A very important part of the homeowners policy is the liability coverage. It provides you with legal defense, representation and indemnification should you be named in a lawsuit and if you are found guilty. There are two types of liability coverages that are offered which are premise liability and personal liability. A homeowners policy will provide coverage for both of these exposures which simply stated is protection for occurrences on your premise and protection for occurrences that happen away from your premise respectively.
The cost for this coverage is relatively inexpensive and one should consider buying additional coverage in this area. Most individuals should also consider purchasing an umbrella or excess liability policy that will cover over one’s home, autos, boats, recreational vehicles, and rentals.
You should know that many policies do have limitations for personal injury (libel, slander), animals, Illegal activities, and intentional acts.
You may want some additional coverage on top of insurance policies you already have. This is where personal umbrella insurance comes into play. This type of insurance is an extension to an already existing insurance policy and covers beyond the regular policy. This insurance can cover different kinds of claims, including homeowner’s or auto insurance. Generally, it is sold in increments of $1 million and is used only when liability on other policies has been exhausted.
Why do you need homeowners liability coverage?
The following situation occurred when one of our client’s children was involved in a snow skiing accident. Upon us writing the insurance policy and knowing the individual’s specific needs, we requested an increase in the amount of personal liability coverage on their homeowners policy up to $300,000 due to the low additional cost. Their son was skiing in Colorado, cut across in front of a lady skiing downhill, and collided with her. The lady’s injuries included broken bones. The boy rightfully assisted the lady and provided information about himself. Subsequently, a lawsuit was filed for medical bills, pain and suffering, and mental anguish. The insurance company paid $300,000 and handled all the legal aspects of the claim. Our clients made a testimonial that stated:
“Thank you for your assistance with the claim.
We were very relieved to know that we had $300,000 of liability coverage when we talked to you. The day we received the lawsuit we were surprised and very nervous.
You never think that something like this could result in such a big lawsuit. If we would not have had this coverage we would’ve had some serious financial problems. Again, thank you.
These types of occurrences happen more than you think and it is extremely important that you read your policies and make sure you have the limits that are appropriate for your personal situation.
The good news is that Alpha Insurance has many excellent markets and we can assist you in designing a policy that provides you with appropriate coverage within your budget. The State of Louisiana Department of Insurance established the Guaranty Association. It provides additional financial protection should an insurance carrier have financial difficulties or become insolvent. Almost all of our companies are covered under the Guaranty Association, however some are not. One way you can tell if a company is non-admitted is that you will see a premium tax charged in addition to your regular premium. This premium will equal 4.85% of the premium plus the inspection fees charged. The Guaranty Association is an excellent protection layer that provides the citizens of Louisiana assurance that their claims will be paid.
If you would like additional information on homeowners claims, please visit our claim section of this website. You will find valuable information about the process of filing a claim and what to do when you have a claim.
It is extremely important that you review your policy and determine if you have proper limits of coverage for both the physical damage to your home, dwelling, contents, other structures, and for additional living expense. We may be able to assist you with general information; however, the best method is to have a contractor provide you with replacement cost for your building, and personal inventories should be done for your contents.
Personal Umbrella Insurance: You may want some additional coverage on top of insurance policies you already have. This is where personal umbrella insurance comes into play. This type of liability insurance is an extension to an already existing insurance policy and covers beyond the regular policy. This insurance can cover different kinds of claims, including homeowners or auto insurance. Generally, it is sold in increments of $1 million and is used only when liability on other policies has been exhausted.
Insurance companies use a variety of factors to evaluate how much coverage you need, which affects your homeowners insurance quote. As a homeowner you should understand some of these basic factors.
Your home may be the biggest investment you’ll ever make. A serious homeowner will want to protect that investment. Here is some valuable information to consider when determining how much home insurance coverage you need.
Having quality Homeowners Insurance can give you peace of mind and the financial protection that you need if you ever need to make a claim on your homeowners insurance policy.