AM I COVERED ?
questions asked by homeowners about insurance
fire, flood, earthquake, or some other natural disaster were to
destroy or damage your home, would you have the right insurance
coverage to rebuild your house?
brochure based on the questions consumers most frequently ask, explains
what is covered in a standard homeowner's policy and what is not.
Where gaps in coverage exist, it tells you how to fill them.
explanations, we assume that you have a policy known as Homeowners-3
(HO-3), the most common homeowners
insurance policy in the United States. Find out what type of
homeowners policy you have. If you have a different policy, you
should review your options in question #17.
#1: Am I covered for direct losses due to fire, lightening,
tornadoes, wind storms, hail, explosions, smoke, vandalism and theft?
The HP-3 provides broad coverage for these and other disasters or
"perils." as they are called in the policy, including
all those listed in the question. You should check the dollar limits
of insurance in your policy and make sure you are comfortable with
the amount of insurance you have for specific items. Also, if you
live near the Atlantic or Gulf coasts, there may be some restrictions
on your coverage for wind damage. Ask your agent about windstorm/hurricane
deductibles. In areas prone to hailstorms, you may have a specific
hail damage deductible.
# 2: Are my jewelry and other valuables covered?
policy provides only from $1,000 to $2,000 for theft of jewelry.
If your jewelry is worth a lot more, you should purchase higher
limits. You may wish to add a floater to your policy to cover specific
pieces of jewelry and other expensive possessions such as paintings,
electronic equipment, stamp collections or silverware, for example.
The floater will provide other higher limits and protect you from
additional risks, not covered in your normal policy.
# 3: If my house is totally destroyed in a fire and I have $150,000
worth of insurance to cover the structure, will this be enough to
rebuild my home?
cost of rebuilding your home is equal or less than $150,000 you
should have enough coverage. The HO-3 policy pays for structural
damage on a replacement cost basis. If the cost of replacing your
home is, say, $120,000, then that is all the insurance you need.
On the other hand if the cost of rebuilding your home is $180,000,
then you will be short $30,000.
live in an area that is frequently hit by major storms, ask your
insurance company about an extended or guaranteed replacement cost
policy. This will provide a certain amount over the policy limit
to rebuild your home so that if building costs go up unexpectedly,
due to high demand of contractor and materials, you will have extra
funds to cover the bill.
choose not to rebuild your home, you will receive the replacement
cost of your home, less depreciation. This is called actual cash
value. You should make sure that the amount of insurance you have
will cover the cost of rebuilding your house. You can find out what
this cost is by talking to your real estate agent or builders in
use the price of your house as the basis for the amount of insurance
you purchase. The market value of your house includes the value
of the land on which the house is situated. In almost all cases,
the land will still be there after a disaster, so you do not need
to insure it. You only need to insure the structure.
# 4: Am I covered for flood damage?
if you live in a flood-prone area it may be wise to purchase flood
insurance. Flood insurance is provided by the federal government,
under a program run by the Federal Insurance Administration. In
some parts of the country, homes can be damaged or destroyed by
mudslides. This risk is also covered under flood policies. Contact
your agent or company representative to get this insurance or call
the Federal Emergency Management Agency at 1-800-427-4661 or visit
its Web site at www.fema.gov.
# 5: A pipe bursts and water flows all over my floors. Am I
The HO-3 covers you for accidental discharge of water from a plumbing
system. You should check your plumbing and heating systems once
a year. While you are covered for damage, who needs the mess and
# 6: What if water seeps into my basement from the ground, am
seepage is excluded under the HO-3. And if the water seepage is
not due to a flood you will not be covered under a flood policy.
Seepage is viewed as a maintenance issue and is not covered by insurance.
You should see a contractor about waterproofing your basement.
# 7: Am I covered for earthquake damage?
coverage is sold as additional coverage to the homeowners policy.
To find out whether you should buy this insurance, talk to your
agent or company representative. The cost of this coverage can vary
significantly from one area to another, depending on the likelihood
of a major earthquake.
# 8: A neighbor slips on my sidewalk or falls down my porch steps
and threatens to take me to court for damages. Does my policy protect
The policy will pay for damages, if a fall or other accident on
your property is the result of your negligence. It will also pay
for the legal costs of defending you against a claim. Also, the
medical payments part of your homeowners policy will cover medical
expenses, if a neighbor or guest is injured on your property. You
should check to see how much liability protection you have. The
standard amount is $100,000. If you feel you need more, consider
purchasing higher limits.
# 9: A tree falls and damages my roof during a storm. Am I covered?
You are covered for the damage to your roof. You are also covered
for the removal of the tree, generally up to $500 limit. You should
cut down dead or dying trees close to you house and prune branches
that are near your house. It's true that your insurance covers damage,
but falling trees and branches can also injure your family.
# 10: During a storm, a tree falls but does no damage to my
property. Am I covered for the cost of removing the tree?
trees and shrubs are covered for losses due to risks like vandalism,
theft and fire, but not wind damage. However, is a fallen tree blocks
access to your home you may be covered for its removal. Decide if
you need extra insurance for the trees, plants and shrubs on your
property. You may be able to purchase extra insurance, which will
not only cover the cost of removing fallen trees, but will also
cover the cost of replacing trees, and other plants.
# 11: If a storm causes a power outage and all the food in my
refrigerator or freezer is spoiled and must be thrown out, can I
make a claim?
answer is no. However, there are a number of exceptions. In some
states, food spoilage is covered under the homeowners policy. In
addition, if the power loss is due to a break in a power line on
or close to your property, you may be covered. You should check
with your agent to find out whether you are covered for food spoilage
in your state. If not, you can add food spoilage coverage to your
policy for an additional premium.
# 12: I have children away at college. Are they covered by my
full-time college students and part of your household, your insurance
generally provides some coverage in a dorm, typically 10 percent
of the contents limit. If they live off campus, some companies may
not provide this coverage if the apartment is rented in the students
# 13: My golf clubs are stolen from the trunk of my car. Does
my homeowners policy cover the loss?
The HO-3 covers your personal property while it is anywhere in the
world. However, if your golf clubs are old, you will only get their
current value, which may not be enough to purchase a new set. Consider
buying a replacement cost endorsement for your personal property.
This way you will get what it costs to replace the golf clubs, less
the applicable deduction.
# 14: I have a small power boat. If it is stolen, am I covered/
what if there is a boating accident and I get sued? Am I covered
or not you for covered for either theft or liability depends on
the size of the boat, the horsepower of the engine and your insurance
company. Coverage for small boats under homeowners policies varies
significantly. Ask your insurance representative whether you need
a boatowners policy.
# 15: My house is close to the ocean. I've heard that is it
is destroyed by the wind, the town's new building code requires
me to rebuild the house on stilts. This will add $30,000 to the
cost of rebuilding my house. Am I covered for this extra cost?
HO-3 excludes costs caused by ordinances or laws that regulate the
construction of buildings. You can purchase an Ordinance or Law
endorsement. This will cover the extra costs involved in meeting
new building codes.
# 16: Am I covered for "Acts of God"?
The term "Acts of God" is not specifically mentioned in
homeowners insurance policies. It usually refers to natural disasters
like hurricanes and tornadoes, as opposed to man-made acts, like
theft and auto accidents. Some natural disasters, such as damage
from windstorms, hail, lightning and volcanic eruptions are covered
under homeowners insurance. Damage from floods and earthquakes is
# 17: What should I do if my policy provides less coverage than
your coverage with your agent. Some older policies provide less
coverage then the HO-3. They may not provide coverage for water
damage, theft or liability. They may also provide coverage for the
house on actual cash value basis, rather than a replacement cost
Cash Value means replacement cost less depreciation. For example,
if your roof is destroyed in a storm, the insurance will only pay
for the cost of a new roof less the amount of depreciation of the
old roof. If your roof was in great shape, this depreciation will
not be large. However, if the roof was old and worn-out, the deduction
for depreciation may be significant. You should try to get an HO-3.
information, contact your agent or company representative.
You can also visit our Web site at www.iii.org.
additional assistance with homeownership questions, contact your
County Extension office listed under County Government in your local