It was several hours after coming off the back nine in sunny Florida when the call came: "Hon," Karen said anxiously, her voice cracking with emotion. "A tree fell on the house."
"What do you mean a tree fell on the house?" as though her statement needed any clarification or explanation. I could hear the frustration and anxiety in her voice. "A tree fell on the living room roof...and there's water coming in. I heard a big crash and the dogs ran."
It was March 2009, and a nor'easter was blowing across New England. I had felt the fury of the nascent storm a day earlier in Orlando. Now, as the gale skipped up the East coast, it was pounding my house with a fierce wind and a cold, skin-splitting rain. After determining that everyone, including the dogs and cats, was fine, I arranged for someone to remove the tree from its new location. I then rebooked my flight and headed home.
The damage could have been worse. The tree was rotted, so most of its weight had morphed into loam by the time the dogs yelled "timber." I made several calls. The first was to a roofer, the second to my insurance company.
For nearly 12 years, I had been dutifully paying my homeowners insurance. Now it was time to see whether the good hands people were going to give me a handshake or the finger. A few days after submitting the claim, the insurance company's appraiser came to survey the carnage. I was pleasantly surprised at how he treated me. He felt my pain and few days later, I felt a check in my hand.
Some people aren't as lucky. When Paula Lazzari of Springfield, Mass., put in a claim for damage caused by a tornado in 2011, she had to fight for her money. The appraiser offered to fix only a broken window and replace the siding on the back of her house. Lazzari was scrappy and refused to be denied. She called the state's Office of Consumer Affairs and Business Regulation. After the state intervened, the insurance company agreed to side Lazzari's entire house, buy a new stockade fence, and replace five windows and two ceilings [source: Ring].
Despite Lazzari's encounter, if you own a home, you need to buy homeowners insurance. Go to the next page find out why.
Homeowners insurance is not a requirement in many states. However, most banks and mortgage lenders insist you carry insurance. Why do they care? Insurance protects the lender's investment in case the house is damaged. Lenders typically want homeowners to carry enough insurance to cover the amount of the mortgage [source: Keefer].
If, for some reason, you cannot purchase insurance, the mortgage company or bank will supply a policy called forced coverage. Whatever you do, try to buy a homeowner's policy yourself. Forced coverage policies are extremely expensive and protect only the interests of the mortgage company, not you, your family or your stuff [source: New Jersey Department of Banking & Insurance].
Also, keep up on your premium payments. If you let your insurance lapse, the mortgage company will insure the home for you. The lender can force you to pay the higher premium until you get your own homeowner's policy [source: National Association of Insurance Commissioners].
Every time Karen's parents, Bill and Bernice -- or anyone else over the age of 65 -- walks up the driveway, especially in the icy winter, I make sure that my dogs don't knock them down. I also make sure Bill and Bernice don't slip on a rock, a patch of ice, a twig, an ant or an imaginary line on the gravel. For one thing, I don't want to see them hurt. I also don't want to be sued for any injury they, or anyone else, might have. Yet, if something does happen, my insurance company promises they'll support me.
Let's hope I never have to find out.
A typical homeowner's policy protects against a lawsuit if someone is injured while on your property. If your dog bites someone, your insurance will probably cover you. While most policies provide up to $100,000 in limited liability insurance, you can purchase additional protection. Liability coverage pays the injured person's medical bills and damages to property. Insurance will also pay an attorney to help defend you in a court case [source: Keefer].
Homeowners insurance will pay to repair or replace your house if it is destroyed or damaged by fire, tornado, hurricanes, nor'easters or most any other type of natural -- except floods -- and human-made calamity. Remember when buying a homeowner's policy, you need enough coverage to replace your house and its contents. About 75 percent of U.S. homeowners do not carry adequate insurance on their home [source: Keefer]. I should check my policy.
Dwelling protection will pay for damage to the main house and any other buildings, such as an attached garage. It will also pay for damage to plumbing, electrical wiring, heating and permanently installed air conditioning units. A homeowner's policy will also pay for damage to fences, sheds, guest houses and other structures, including an unattached garage [source: National Association of Insurance Commissioners].
If your possessions are destroyed, don't fret -- insurance will reimburse you for the value of your property including appliances, furniture, clothing and other possessions. What's cool is those things don't have to be in the house. They can be off site in a self-storage locker, or even with your kid at school.
Many policies give you a choice on how to insure your belongings. You can get actual cash value or replacement cost coverage. What's the difference? Most things depreciate over time. Actual cash value will allow you to recoup the amount you expect to get if you sold the items, minus the depreciation. Replacement cost coverage allows you to replace your insured personal property for what it would cost to buy them new. Replacement cost coverage is more expensive than actual cash value coverage [source: Allstate].
Keep in mind that most companies provide personal property coverage up to 70 percent of the amount of insurance you have on the structure. So, if you're house is insured for $100,000, you should be insured for up to $70,000 worth of personal property coverage [source: CBS Detroit].
Let's say Bill and Bernice, or maybe cousin Evie, are walking up the driveway and one of them slips on a rock and breaks and a hip. Although they don't want to take me to court, my insurance company will pay for their medical bills. Guest medical coverage is included in most homeowner policies. Insurance will pay for anyone who is injured on the property in an accident not covered by the general liability portion of the policy. The insurance company will pay for such things as surgery, X-rays, an ambulance ride and a person's hospital stay [source: Allstate].
For most of us, our home is the largest single investment we'll make in our lifetime. Homeowners insurance protects the equity in your home. Equity is the value of a piece of property over and above any mortgage or other liabilities relating to that property. As you make renovations to your home, the equity in your property increases. Homeowners insurance makes sure if something happens to your home, you won't have to start building equity again [source: Home Insurance].
When tornadoes ripped through the Midwest in early March 2012, destroying entire neighborhoods and towns, special teams of insurance appraisers descended on the hard hit areas to help people file claims. When the storms hit on March 2, State Farm reported that it had received 6,700 home claims by March 6 [source: Pontoriero].
Whether it's an unexpected windstorm, a tornado or hurricane, homeowners insurance will pay for the repairs, even if the house or its adjoining structures were destroyed. Beware! Some natural disasters, such as earthquakes, require special policies [source: Home Insurance]. Moreover, flooding is not covered in most homeowner policies. Instead, you have to purchase separate flood insurance from the federal government's National Flood Insurance Program [source: Allstate].
Just before Halloween 2011, an angry nor'easter roared into Connecticut dumping more than a foot of snow in some areas. Because the leaves were still on the trees, thousands of people lost power as the weighted branches toppled onto electric lines. Up the road from us, a friend had a tree come down on her house. Luckily, no one was injured, but there was a gaping hole in the roof. The house was uninhabitable for a time. Our friend's insurance company paid her to stay in a hotel until a contractor fixed the roof.
If your home is destroyed, or is so damaged that you have to seek shelter elsewhere, a standard home insurance policy will pay to relocate you. So called "loss of use" coverage reimburses you for hotels, meals and any other living expenses. Most insurance companies pay up to 20 percent of the coverage price for loss of use expenses. That means if your house is insured for $200,000, your loss of use coverage is approximately $40,000 [source: Home Insurance].
I have a Great Dane and two other big snouts to protect my house. However, if someone were foolish enough to break in, and lived to tell about it, my homeowner's policy will cover anything they steal. A homeowner's policy will reimburse for the actual cash value or replacement costs, described previously. To make things go smoothly at the time of the claim, inventory all the costly items in your house. Not only document them on paper, but also take pictures and save receipts. I wouldn't put the inventory on a computer -- it might be stolen, too.
If nothing else, peace of mind is the main benefit of having homeowners insurance. If I sound like a shill for the insurance companies, I apologize. However, I recognize homeowners insurance is unavoidable. Hopefully a tornado will never rip your attic to shreds, and a tree will never turn your living room roof into kindling. But if they do, you'll be glad you have insurance.
Just remember, insurance companies are not doing you any favors. To them, you're just a number. They don't want to pay. Often, they'll hedge, they'll balk and they'll say your contractor's a crook. Keep in mind that it's your money. Stand your ground. If you feel you're being mistreated, call your state consumer protection or banking and insurance agencies. It worked for Paula Lazzari of Springfield, Mass.
Author's Note: 10 Reasons to Buy Homeowners Insurance
No one wants to buy insurance, especially me. Don't let the insurance company walk all over you. You pay them for a service. Remind them of that fact if they give you problems.
- How Homeowners Insurance Works
- Are there different types of homeowners insurance?
- Do you need homeowners insurance?
- Can everyone get homeowners insurance?
- How much homeowners insurance do you need?
- Can you get additional homeowners insurance coverage?
- Can you reduce the cost of your homeowners insurance?
- What are the extra costs when you buy a home?
More Great Links
- Allstate.com. "Flood Insurance." (March 17, 2012). http://www.allstate.com/home-insurance/flood-insurance-main.aspx
- Allstate.com. "Guest Medical Coverage." (March 16, 2012). http://www.allstate.com/home-insurance/guest-medical-coverage.aspx
- Allstate.com. "Personal Property Coverage." (March 16, 2012). http://www.allstate.com/home-insurance/personal-property-coverage.aspx
- CBS Detroit. "6 Questions to Ask When Shopping for Homeowners insurance." Feb. 18, 2012. (March 16, 2012). http://detroit.cbslocal.com/2012/02/18/6-questions-to-ask-when-shopping-for-homeowners-insurance/
- CNN.com. "Tips on homeowners insurance." (March 16, 2012). http://money.cnn.com/magazines/moneymag/money101/lesson19/index.htm
- Home Insurance.org. "7 Comforting Reasons to Purchase House Insurance." (March 16, 2012). http://www.homeinsurance.org/house-insurance/
- Keefer, Amber. "The Reasons to Have Homeowners Insurance." The San Francisco Chronicle. (March 15, 2012). http://homeguides.sfgate.com/reasons-homeowners-insurance-1643.html
- National Association of Insurance Commissioners. "A Consumer's Guide to Home Insurance." (March 15, 2012). http://www.naic.org/documents/consumer_guide_home.pdf
- New Jersey Department of Banking & Insurance. "Homeowners insurance Frequently Asked Questions." (March 15, 2012). http://www.state.nj.us/dobi/ins_ombudsman/om_hofaq.htm#3
- Pontoriero, Caterina. "Scenes of Devastation Throughout Ind. & Ky. In Tornado Aftermath." Property Casualty 360˚. March 7, 2012. (March 16, 2012). http://www.propertycasualty360.com/2012/03/07/scenes-of-devastation-throughout-ind-ky-in-tornad?t=commercial-business
- Ring, Dan. "Problems with home insurance among top 5 complaints of Massachusetts consumers last year." The Springfield Republican." March 13, 2012. (March 15, 2012). http://www.masslive.com/news/index.ssf/2012/03/problems_with_home_insurance_a.html