Insurance 101 - Home

Homeowners Coverage | (top)

Your home is one of your most valuable assets. Whether you are a current homeowner, are looking to own, or are renting a home, you need financial protection for the important things in your life. There are a variety of policy forms available that are designed to meet your individual needs. Contact your local agent to find out what form is for you.

A standard homeowners insurance policy is a package policy that provides financial protection against both the damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. A standard policy covers you against a wide variety of perils such as windstorms, hail, fire, tornado and theft. However, the extent of perils covered depends on the type of policy. For example, damage caused by floods is usually excluded and must be purchased separately. For more information on how to purchase flood insurance, please visit the National Flood Insurance Program website.

Why do you need homeowners insurance?

  • To protect your investment in both your home and its contents against losses, provide medical payments to people injured while on your property, and to protect you against many types of liability lawsuits that may leave you in financial difficulty.
  • If you buy a home, your mortgage company will require you to maintain homeowners insurance.

A standard homeowners insurance policy consists of six fundamental types of coverage. They include:

  • Dwelling - Coverage for the structure of your home
  • Private Structures - Coverage for detached garages and other structures not attached to the dwelling
  • Personal Property - Coverage for your personal belongings
  • Loss Of Use - Coverage for additional living expenses when a covered peril leaves your home temporarily unlivable
  • Personal Liability - Coverage for bodily injury or property damage that you or family members cause to other people
  • Medical Payments - Coverage for medical expenses of others injured on your property or off-premises if caused by you

Dwelling

  • This part of your policy pays to repair or rebuild your home if it is damaged or destroyed by a covered loss listed in your policy. For example, a standard policy will cover losses such as fire, hail, windstorm and theft. However, it will not pay for damage caused by flood or routine wear and tear.
  • When purchasing homeowners insurance, it is important that you buy enough coverage to rebuild your home in the event of a covered loss.
  • Most policies cover losses on a replacement cost basis, which pays for the repair or replacement of damaged property with materials of similar kind and quality, without subtracting for depreciation.

Private Structures

  • This part of your policy covers structures detached from your home such as a garage, tool shed, gazebo or fence.
  • In general, these structures are covered for 10% of the amount of insurance you have on the structure of your home.

Personal Property

  • This part of your policy covers your personal items such as furniture, clothes, sports equipment, pots and pans or any other personal items.
  • In general, this limit is 50% of your structure limit.
  • Off-premise coverage is included. This means your belongings are covered anywhere in the world.
  • Luxurious items such as jewelry and furs are included in this part of your policy, up to a limit of $1,000 to $2,000 if they are stolen, depending on the policy. If you own jewelry and furs appraised for more than this amount, you will want to purchase a Special Personal Property Endorsement and insure the item(s) for its appraised value. The Special Personal Property Endorsement also includes accidental disappearance, meaning you are covered if you simply lose that item. There is no deductible with this coverage.
  • Trees, plants and shrubs are also covered under this part of your policy. Generally, you are covered for up to 5% of the dwelling limit or up to $500 per item. Common perils covered include theft, fire, lightning, explosion, vandalism, and riot. However, damage caused by wind, disease, hail or weight of ice is not covered.
  • To determine if you have enough coverage, conduct a home inventory to compile a list of all of your items.

Loss Of Use

  • This condition in the policy reimburses you for the extra cost of living elsewhere while your home is being restored after a covered loss.
  • Covered extra costs, for example, include hotel bills and meals at restaurants.

Personal Liability

  • This section defends you (up to the policy limit) anywhere in the world against any payments which you are legally obligated to pay as damages because of bodily injury or property damage that you or your family members cause to other people. This section also pays for damage caused by your pets. For example, if your child or dog accidentally ruins your neighbor’s expensive rug, you are covered.
  • You will want to be sure you have enough liability coverage to cover your assets. If you do not, you may need to purchase an umbrella policy.

Medical Payments

  • This section covers medical expenses incurred by persons, other than you or an immediate family member, who sustains bodily injury caused by an accident in your home. This is essentially no-fault medical coverage.
  • Medical bills for your family or your pet are not covered.
  • For example, if your neighbor is injured in your home, he or she can submit medical bills to your insurance company and a liability claim will not have to be filed against you.

Renters Coverage | (top)

Whether you rent a home or an apartment, a renter’s insurance policy protects against the loss or destruction of your belongings. Your furniture and clothes, not to mention theft-prone valuables such as your laptop and television, are covered against losses as a result of a covered peril. Contrary to what many people believe, a landlord’s insurance does not cover your possessions. For example, if a fire breaks out and your apartment burns, the landlord will be reimbursed for the cost of the building, but you will not be compensated for your loss of contents unless you have a renter’s policy. Because a renter’s policy covers only the value of your belongings and not the physical building, the premium is relatively inexpensive.

Like homeowners insurance, renters insurance covers you if you are legally obligated to pay damages because of bodily injury or property damage that you or your family members cause to other people.

Renters insurance also covers any additional living expenses if you are unable to live in your rented place of residence because of a fire or other covered peril. Most policies will compensate you the difference between your additional living expenses and your normal living expenses, but still may set limits as to the amount they will pay. Check with your local agent to see how your policy reads.

Condo & Townhome Coverage | (top)

Insurance is different for a condominium unit and townhome owner than for an owner of a conventional home or even a renter. In order to protect your investment, you will want two separate policies:

  • You will need your own insurance policy to provide coverage for your personal possessions, structural improvements to your place and additional living expenses if a covered peril loss occurs. Like homeowners and renters policies, you also get liability protection under a condo/townhome policy.
  • You will also need to be sure your condo/townhome association board provides you with a “master policy”. This policy will cover the common areas you share with others in your building such as the roof, basement, elevator, and walkways for both liability and physical damage.

Make sure to read your bylaws and/or proprietary lease provided to you by your association. In some cases, the individual owner may only be responsible for adjustments to the original structure of the unit. In other situations, the association may be responsible for insuring only the bare walls, floor and ceiling. Be sure to check with your association and local agent to be insured correctly!

Glossary | (top)

Additional living expenses:
Extra charges covered by homeowners policies over and above your customary living expenses, usually used when you insured require temporary shelter due to damage by a covered peril that makes your home temporarily uninhabitable.

Appraisal:
A survey to determine a property’s insurable value, or the amount of a loss.

Broad form:
A homeowners form covering a variety of named perils such as fire, wind, hail, explosion, smoke, vandalism, theft, freezing, falling objects, etc.

Cause of loss:
The means by which property is damaged or destroyed, such as wind, hail, theft, etc.

Contents:
Personal property that is usually contained in a building or other structure.

Depreciation:
Reduction in an item’s value based on the item’s age, condition and useful life expectancy.

Endorsement:
A written form attached to an insurance policy that alters the policy’s coverage, terms, or conditions.

Exclusion:
A policy provision that eliminates coverage for specified exposures such as certain risks, people, property classes or locations.

Fair rental value:
Under Coverage D - Loss of Use of a homeowners policy, the amount of rent (less any discontinued expenses) that you would have received for any part of the residence rented to another individual for residential purposes, if the residence had not been damaged by a covered cause of loss.

Hazard:
A condition that increases the frequency or severity of a loss, such as faulty brakes (auto hazard) or a cracked sidewalk (home hazard).

Homeowners insurance policy:
A standard homeowners insurance policy is a package policy that provides financial protection against both the damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. A homeowners policy also covers additional living expenses, in which the policy reimburses you for the extra cost of living elsewhere while your house is being restored after a disaster.

Inland marine coverage:
Inland Marine Coverage is generally in the form of an endorsement to an existing policy of insurance which insures specifically identified property. This endorsement can be added to your homeowners policy or you can create a stand-alone policy to insured such items as jewelry, furs, sporting equipment, boats, musical instruments, or collectibles.

Insurance:
A risk management technique that transfers the potential financial consequences of certain specified loss exposures from you to an insurance company.

Insurance policy:
A contract that states the agreement of rights and duties between the insurance company and you.

Legal liability:
The legally enforceable obligation of a person or an organization to pay a sum of money (called damages) to another person or organization.

Liability loss exposure:
Any condition or situation that presents the possibility of a claim alleging legal responsibility of a person or business for injury or damage suffered by another party.

Limits of liability:
Many of your property and liability coverages have limits which are the maximum amount of insurance provided for that particular coverage. These limits are generally found on your declarations page.

Loss exposure:
Any condition or situation that presents a possibility of loss, regardless of whether loss actually occurs.

Loss of use:
A provision in homeowners and renters insurance policies that reimburses you for any extra living expenses due to having to live elsewhere while your home is being restored following a disaster.

Peril:
The cause of the loss.

Personal injury:
Injury, other than bodily injury, arising from intentional torts such as libel, slander, or invasion of privacy.

Personal insurance:
Insurance that covers the financial consequences of losses to individuals and families caused by death, illness, injury, disability, and unemployment.

Personal liability coverage:
Coverage for damages, plus costs of any defense, related to a claim or suit brought against the insured that resulted from bodily injury or property damage caused by an occurrence covered under the policy.

Personal property:
All tangible or intangible property that is not real property.

Premium:
The price of the insurance coverage provided for a specified period.

Real property:
Tangible property consisting of land, all structures permanently attached to the land, and whatever is growing on the land.

Replacement cost:
Insurance that pays the amount needed to replace damaged personal property or dwelling property without deducting for depreciation.

Risk:
The uncertainty about outcomes, some of which can be negative.

Salvage:
Damaged property an insurer takes over to reduce its loss after paying a claim. Insurers receive salvage rights over property on which they have paid claims, such as badly damaged cars.

Scheduled coverage:
Insurance for property specifically listed (scheduled) on a policy, with a limit of liability for each item.

Special Form:
A policy that provides coverage for any direct loss to property unless the loss is caused by a peril specifically excluded, such as flooding, earth movement, war, intentional acts, governmental action, etc.

Water back-up:
This endorsement insures your property for damage by the back-up of sewers or drains. Water back-up may not always be included, so be sure to check your personal policy.

FAQ's | (top)

A: Yes, your personal contents are covered anywhere in the world by the contents coverage of your homeowners policy.

A: Yes, you are covered if your ring is properly scheduled on a Scheduled Personal Property Endorsement prior to the loss.

A: A standard homeowners policy includes coverage for jewelry and other precious items such as watches and furs. However, the insurer will not pay more than an amount specified in the policy. You should schedule your diamond ring by purchasing a Scheduled Personal Property Endorsement, in which the ring will be scheduled at the professionally appraised limit.

A: Think about it this way – how much would it cost you to replace your entire wardrobe all at once? Or all of your dishes, pots and pans, and linens? Those few belongings may not seem like much to you, but may financially add up to a large amount when you begin to replace them. Or what if you or an immediate family member cause bodily injury or property damage to other people? Would you be financially stable to cover your legal responsibility?

A: If you have financed your home with a mortgage, your mortgage company will require you to get homeowners coverage in order to protect their investment in your home. If you have paid off your mortgage or paid cash for your home, no one will force you to buy homeowners insurance. However, it is not advised to go without homeowners insurance and risk losing what you have invested in your home.

A: Actually, it is not as costly as you think! For a relatively low premium, you can greatly minimize your financial risk.

A: Not true. Your landlord’s policy most likely does not include liability for something that happens in your rented residence.

A: Most homeowners and renters policies do not cover flood damage. Flood coverage can be purchased through the National Flood Insurance Program, as well as a group of private insurers.

A: You are covered only if your policy has a Water Back-Up Endorsement form.

A: Yes, a standard homeowner’s policy will provide coverage, up to your medical payments policy limit, for your neighbor’s stitches and medical expenses. Bodily Injury would also apply due to strict liability.

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A: Yes, the lady’s medical expenses are covered up to your policy limit.

A: Under a standard homeowners policy, lightning is one of the common covered perils. Yes, you would be covered.

A: You are responsible for the loss unless the neighbor was determined to be negligent. An example of negligence in this situation would be your neighbor not removing a rotten tree.

Why IMT? | (top)

Having your home insured with IMT means protection for your dwelling, garage and other buildings on your premises used for non-business purposes. IMT’s homeowner policies also cover your personal property, provide medical payments to people injured while on your property and protects you against many types of liability lawsuits. With an IMT Homeowners policy, you can truly know what it means to Be Worry Free with IMT.

IMT Homeowner Policies Provide the Following Property Coverages:

  • Automatic replacement cost coverage for your home and attached structures if insured for at least 80% of their replacement value.
  • Coverage for detached garages and other structures not attached to the dwelling.
  • Protection for your personal property while it is anywhere in the world.
  • Coverage for additional living expenses when a covered peril leaves your home temporarily unlivable.

Save money!

Reduce your premium several ways with special discounts for:

  • Elite Program for homes with coverage on the dwelling over $150,000.
  • Elite Plus Program for homes with coverage on the dwelling over $250,000.
  • Homes less than 17 years old (14 years old in Nebraska).
  • Homes with protection devices such as smoke alarms and security systems.
  • Multi-policy discounts if you have your home and auto insured with IMT or Wadena.

If you rent your home

Even if you don’t own a home, you still need insurance protection. An IMT renter’s policy offers you coverage for your personal property while providing medical payments and liability coverage. It doesn’t matter if you rent an entire house or an apartment, an IMT renters policy will help you Be Worry Free with IMT.

Not convinced you need renters insurance?

Would you be able to easily replace your clothing, furniture, electronics, appliances, and miscellaneous household items if they were destroyed in a fire or tornado? The value of these items can quickly add up to several thousand dollars.

According to the U.S. Department of Justice, rented households were burglarized at rates 79 percent higher than owned households.

If you accidentally cause an injury to another person or damage another person’s property, your liability coverage can help protect you. Your liability coverage extends to incidents occurring within your residence and elsewhere.

In addition to the coverages already mentioned, your renters policy will pay you additional living expense if you are unable to live in your rented residence because of a fire or other covered loss.

You may choose to have your personal property losses settled on an actual cash value basis or a replacement cost basis. If you elect the replacement cost option, there will be no deduction for depreciation.

You may be eligible for discounts on your renters policy and personal auto policy if both are insured with IMT

We would encourage you to find out more about all of our insurance products and obtain a free quote by contacting a local insurance agent today!