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FAQ Homeowners Insurance

What does "HO" stand for?
Different types of homeowners policy forms are referred to as HO-1, HO-2, HO-3, and so forth. There are seven basic kinds of home insurance policies and they tend to be defined by the perils they cover:

HO-1. Basic homeowners. Covers your dwelling and personal property against losses from 11 types of perils: fire or lightning; windstorm or hail; explosion; riot or civil commotion; aircraft; vehicles; smoke; vandalism or malicious mischief; theft; damage by glass or safety glazing material that is part of a building; and volcanic eruption.

HO-2. Basic homeowners plus. Covers dwelling and personal property against 11 perils plus six more: falling objects; weight of ice, snow or sleet; three categories of water-related damage from home utilities or appliances; and electrical surge damage.

HO-3. Extended or special homeowners. Covers 17 stated perils plus any other peril not specified in your policy, except for flood, earthquake, war, and nuclear accident.

HO-4. Renters coverage. Covers only personal property from 17 listed perils.

HO-5. All risk coverage for building and personal property. This policy form isn't sold very often.

HO-6. Condominium coverage. Covers personal property from 17 listed perils along with certain building items in which the unit owner might have an insurance interest.

HO-8. Basic older home. Covers dwelling and personal property from 11 perils. Differs from HO-1 in that it covers repairs or actual cash values - not rebuilding costs. This is for homes where some historic or architectural aspects make the home's replacement cost significantly higher than its market value.

What is Homeowners Insurance?
Homeowners insurance protects you if your home is damaged or destroyed. In addition, it covers your family's possessions and can provide you with compensation for liability claims, medical expenses, and other amounts that result from property damage and personal injury suffered to others. By paying insurance premiums, and satisfying the other requirements of your insurance company, you can protect yourself in the event of loss due to unforeseen and/or catastrophic events. You still won't be able to predict when an unforeseen event may occur, but you will sleep better knowing that homeowners insurance can save you from catastrophic loss and financial disaster.

Why do you need Homeowners Insurance?
You may need homeowner's insurance because your mortgage lender requires it. But, even if you own your home outright, you still need homeowners insurance to protect that which you can't afford to lose. You may spend years building up a solid financial foundation for you and your family. All that hard work can be lost in a matter of minutes when, for example, a hurricane devastates your house, a burglar robs and vandalizes your home while you're gone, your dog bites and severely injures a child, or guest in your home is hospitalized after falling on your pool deck. Homeowner's insurance is designed to help prevent that result. (Renters and owners of condominiums and cooperatives can get coverage using variations of the same basic insurance tailored to their needs).

What is the process that my insurance company follows when I file a claim? Here is a general idea of the claims process:

Insured calls agent or claim service center to report initial claim.

Claim received in local claim office from service center.

The insured receives a call from the claim department to review loss facts and claim-handling procedures.

If an inspection is not needed, the adjuster requests information needed to process the claim and issue a settlement check.

If an inspection is needed, the claim is assigned to a field adjuster who contacts the insured and sets an appointment.

If a contractor is involved, the adjuster attempts to meet with the customer and the contractor to reach an agreed scope and dollar amount of loss. An estimate is prepared and a check is written for the damages.

If a contractor is not involved, the adjuster prepares an estimate and issues a check for the damages.

If the insured obtains a contractor after the loss is settled, the insured is instructed to have the contractor review the estimate and contact the adjuster with any discrepancies.

Every attempt is made to reach an agreed price with the contractor and resolve any discrepancies. If additional money is owed, a supplemental estimate is prepared and a check issued.

Will filing one claim on my homeowners insurance cause my rates to go up?
No. In most cases, once an insurer reviews your loss history and finds none, one claim should not affect your rates. If the claim exposes some greater risk on your property, however, such as owning a trampoline or new swimming pool, then you may face a rate increase.

Do I need to buy flood insurance?
If you want your belongings covered against damages caused by a flood, the answer is yes. Basic homeowners insurance policies do not cover damage from flooding. Because flood damage happens so infrequently, most insurance companies don't write flood coverage. The National Flood Insurance Program (NFIP) underwrites the overwhelming majority of flood policies in the United States.

I have a dog that bit someone once. Will that affect my chances of getting homeowners insurance?
While having a dog with a history of biting doesn't automatically disqualify you from getting a homeowners policy, it can make it a little more difficult. You might end up having to get a policy that excludes coverage for anything your dog does. You can read more about the subject in Good dog, bad dog: Home insurance for dog lovers.

If a tree falls on my house from my neighbor's yard, who pays for the damage?
Generally the insurance responsibility lies with whoever's property is damaged. In other words, if a tree falls on your home, no matter where the tree came from, your insurance company should pay for your home repair. An exception would be if the damage occurred as a result of negligence; for instance, if the tree was dead before it fell, and you had proof that your neighbor knew the tree was dead. Under those circumstances, the damage becomes your neighbor's liability. As a rule, state insurance officials suggest that you file a claim with your insurance company and let them deal with it.

We're going to be building a house. How do I insure it while it's under construction?
Basically, you just need a standard homeowners policy. Make sure to mention that the house is currently under construction.

I own a home that no one is currently living in. Will it be difficult to insure?
It certainly could be. There are several factors that will influence whether or not you can get insurance for your vacant home. Is the house currently for sale? How long do you plan to leave it vacant? Does someone check on it regularly? Is the house secluded from view?

I can't find homeowners insurance. I've checked with many insurers but no one will sell me a policy. What can I do?
Many states have an "insurer of last resort," usually called a FAIR Plan. FAIR Plans were created to give those who couldn't get insurance from the private market a chance to purchase homeowners insurance. Your Lighthouse representative will be able to help you determine if you are eligible for coverage by your state's FAIR Plan or if there are other options you can explore.

I heard something about a "home warranty." What is it and where do I buy one?
Home warranties aren't insurance, but some insurance companies are starting to sell them. A home warranty will cover repair costs on items in your home - such as your refrigerator, central air conditioning system and other major appliances - but everything needs to be in good working order before purchasing a home warranty.


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