What Homeowner's Insurance Covers

Does my homeowner's insurance cover me for identity theft?

Identity theft is not necessarily part of a standard homeowner's policy. There are certain insurance carriers out there that are offering it as sort of a premium endorsement, but that's something you can't take for granted. Many carriers, under the homeowner's insurance policy, will insure you if your credit cards are stolen, for example, up to a certain limit. Maybe it's only $500. They may reimburse you in case your identity was used to take out other credit cards and things like that. You should not take this for granted. It is not a standard part of the homeowner's insurance coverage, and it is something you need to nail down with your insurance agent, broker and your insurer when you purchase the coverage. Ask that question.

What items are not covered, or may have limited coverage, under my homeowner's insurance policy?

Under your standard homeowner's insurance policy, there may be some special types of properties of high value that won't automatically be covered. For instance, a homeowner's policy will cover the replacement when you lose your clothing in a fire. They'll buy you a new winter coat. They'll buy you a new suit. They won't necessarily replace a mink coat unless you bring this to their attention at the beginning when you buy the policy and the coat is appraised and added on as an endorsement. The same should be done if you have any fine art, a very valuable painting or any other collectables like baseball cards that happen to be valuable. You know that Mickey Mantel card from 1968 won't automatically be covered unless you bring it to the attention of the insurer and they add it on as a scheduled endorsement so that everyone knows up front what the value is, that it is covered under the policy and there is no misunderstanding if any of that property damaged or lost.

What kind of insurance do I need if I live in a condo instead of a house?

If you live in a condo or a co-op, there are additional insurance issues to worry about beyond if you own a stand-alone home. If you're in a building, for instance, that has multi-family dwelling, you may be with anywhere from 50 to 100 other families in that building. A condo or a co-op may have certain liabilities in common areas. As a shareholder you may be responsible for some of these exposures and you want to make sure that if you do live in a condo, you get a homeowner's insurance policy that is tailored to that specific kind of situation. Thus, there'll be no disputes if there is a loss down the road.

If I work at home or telecommute, do I need special insurance coverage?

If you do work out of your home, you definitely cannot assume that your standard homeowner's insurance is going to cover all your exposures. Homeowner's insurance is really residential insurance. It's supposed to cover your personal property and liabilities in case anything should happen in terms of a fire or hurricane, in terms of someone being injured on your property. However, if you're running a business out of your home, there are special coverages that you can buy to cover your liabilities in that instance, because if you were found to have suffered a loss while you were working at home as opposed to just residing on the property, you could face the fact that you do not have coverage under your homeowner's policy. So it's a question you need to bring up to your agent and broker to make sure the insurer is aware of what the situation is. Perhaps endorsements could be added to the standard homeowner's policy to cover those situations, or you might need an additional home based business policy to cover you.

What is "private mortgage insurance" or "PMI"?

Private mortgage insurance is basically required by a lender to cover their investment if you take out a mortgage and you only put a tiny bit of money down. It's usually people who put less than 2% down on a house may often be required to buy PMI insurance to protect the lender in case the homeowner defaults on their loan. There are various regulations in place through the federal government in terms of disclosure, how much this costs, why it's needed, things of that nature. But that's basically it. It's to protect the lender in case you default on your loan. And it can be made a condition of the loan--if you don't buy the PMI insurance, we don't give you the loan. So that's something you do have to watch out for.

If I have a dog, can I get homeowner's insurance?

You can certainly get homeowner's insurance if you have a dog. My advice to people is that if they do have some sort of pet, they bring this up when they buy insurance with their agent and their insurance company. The last thing you want is to have a surprise and to find out that somehow domestic pets are not covered under the insurance policy. The more information the better and it never hurts to ask. It's an important thing to everybody understands upfront what exposures you face with your homeowner's insurance policy.

If I have mold in my house, can I get homeowner's insurance?

If the mold is in the house when you apply for insurance, it might be a factor, although for the most part, the insurance company would exclude mold losses anyway. I would suggest again that you be upfront with the insurer if there is a mold loss. If you do not tell the insurer you have a mold issue when you buy the insurance, the insurer might try to cancel your coverage and say that you weren't being forthcoming about the exposures you faced. It's possible you could get insurance, but it's unlikely that the insurance would cover any mold damage.

If I am turned down for homeowner's insurance, what can I do?

If you're turned down for homeowner's insurance, you have a lot of options. First of all, there are lot of fish in the sea. There are a lot of carriers that write insurance. You can either check with your independent agent if they have other markets. If you were turned down for insurance by a particular carrier which has a captive agent (which is an agent who works only for that company), you could look at other agencies on the block. You might see an ad in your local paper or on TV for an 0800-number to call for homeowner's insurance. But if worse comes to worse, many states--especially those that are prone to catastrophes, such as Florida--have a residual market, a so-called "market of last resort," where if an individual homeowner can't get coverage in the private market, they can be insured in a state-funded facility.