HOMEOWNERS INSURANCE
Homeowners insurance helps protect your home, personal belongings, and financial security when a covered loss occurs. Because coverage, exclusions, deductibles, premiums, and discounts vary among insurance companies, buyers should compare several policies—not simply choose the lowest-priced option.
Mortgage lenders generally require homeowners insurance, but maintaining adequate coverage is also important after a mortgage has been paid off. Review your policy regularly, particularly after remodeling, making major purchases, or experiencing changes in local rebuilding costs.
WAYS TO MANAGE INSURANCE COSTS
Ask a licensed insurance professional whether any of the following options could reduce your premium:
• Compare multiple insurers. Prices and underwriting requirements can vary considerably for similar coverage.
• Consider a higher deductible. A higher deductible may reduce the premium, but select only an amount you could comfortably pay after a loss.
• Bundle policies. Purchasing homeowners and automobile insurance from the same company may qualify you for a multi-policy discount.
• Improve home safety and security. Smoke detectors, monitored alarm systems, fire extinguishers, deadbolts, water-leak sensors, and other protective devices may qualify for discounts.
• Maintain the property. The age and condition of the roof, plumbing, electrical system, and HVAC equipment may affect eligibility and cost.
• Ask about available discounts. Depending on the insurer, discounts may be offered for newer or renovated homes, claim-free history, automatic payments, or other qualifying factors.
• Review coverage annually. Make sure your limits reflect current rebuilding costs and the value of your belongings.
• Avoid unnecessary gaps in coverage. Allowing a policy to lapse may create problems when obtaining future coverage.
Discounts are not guaranteed, and reducing coverage solely to obtain a lower premium can leave a homeowner financially exposed.
UNDERSTANDING YOUR COVERAGE
A typical homeowners policy may include:
1. DWELLING COVERAGE
Helps repair or rebuild the home when it is damaged by a covered cause of loss, subject to the policy’s terms, limits, exclusions, and deductible.
2. OTHER STRUCTURES COVERAGE
May cover detached structures such as a garage, fence, shed, or certain other improvements.
3. PERSONAL PROPERTY COVERAGE
Helps pay for covered damage to or theft of furniture, clothing, electronics, and other belongings. Special limits may apply to jewelry, artwork, collectibles, firearms, business property, and other valuable items.
4. PERSONAL LIABILITY COVERAGE
May provide financial protection if the policyholder is legally responsible for another person’s bodily injury or property damage.
5. MEDICAL PAYMENTS COVERAGE
May pay certain medical expenses when a guest is accidentally injured on the property, regardless of fault, subject to policy terms and limits.
6. ADDITIONAL LIVING EXPENSES
May help pay the additional cost of temporary housing, meals, and other necessary expenses if a covered loss makes the home uninhabitable. Limits, exclusions, and time restrictions usually apply.
REPLACEMENT COST AND ACTUAL CASH VALUE
It is important to understand how a policy will calculate payment after a covered loss.
• Replacement-cost coverage generally pays the cost to repair or replace covered property with materials or items of similar kind and quality, without subtracting depreciation, up to the policy limits and subject to its terms.
• Actual-cash-value coverage generally pays the replacement cost minus depreciation for age, condition, and wear. This may not provide enough money to replace the damaged property completely.
A home’s replacement cost is not the same as its purchase price, market value, tax assessment, or the amount owed on the mortgage. Replacement cost is based on the estimated expense of rebuilding the structure.
KNOW WHAT IS—AND IS NOT—COVERED
Policies may cover the dwelling differently from personal property. Some provide broader “open-peril” coverage for the home while covering personal belongings only for specifically listed causes of loss. Always review the policy’s exclusions and limitations carefully.
Standard homeowners policies generally do not cover every risk. Flooding and earthquakes are commonly excluded and may require separate policies or endorsements. Arizona homeowners should also discuss wildfire exposure, monsoon-related risks, sewer or drain backup, service lines, roof coverage, water damage, and rebuilding-cost protection with a licensed insurance professional.
Flood damage is generally not covered by a standard homeowners policy—even when the property is outside a designated high-risk flood zone.
CREATING A HOME INVENTORY
Maintain a current inventory of your belongings. Photographs, videos, serial numbers, receipts, appraisals, and written descriptions can make it easier to document property after a loss. Keep a copy somewhere other than inside the home, such as secure cloud storage or another safe location.
WHAT TO DO AFTER A LOSS
If damage or loss occurs:
1. Make sure everyone is safe and contact emergency services when necessary.
2. Notify the insurance company or agent promptly.
3. Take reasonable steps to prevent additional damage when it is safe to do so.
4. Photograph or record the damage before moving or disposing of items.
5. Avoid permanent repairs until the insurer has had an opportunity to inspect the damage, unless immediate action is necessary for safety.
6. Keep damaged property unless the insurer authorizes disposal.
7. Prepare a detailed inventory of damaged or missing belongings.
8. Save receipts for temporary repairs, lodging, meals, and other loss-related expenses.
9. Cooperate with the insurer’s reasonable requests for documentation and inspection.
10. Keep copies of the policy, claim number, estimates, correspondence, photographs, and notes from every conversation.
Policy terms differ. Coverage decisions are made by the insurance company—not by the Realtor®—and are subject to the individual policy’s limits, deductibles, conditions, and exclusions. Buyers and homeowners should consult a licensed insurance professional to select appropriate coverage.
YOUR REAL ESTATE RESOURCE
Susie Schmitt, Associate Broker | REALTOR®
Tierra Antigua Realty
Susie Schmitt helps buyers understand the important steps involved in purchasing and protecting a home. She can assist with coordinating real estate deadlines and communicating property information, while your licensed insurance professional advises you about insurance coverage, premiums, and policy requirements.
Professional guidance. Personalized service. Your best interests always come first.