What is homeowners insurance?

Unforeseen incidents such as home fires, theft, and other risks can happen any time. Homeowners insurance is designed to provide a financial safety net for Vermont residents when a covered incident strikes.

Homeowners insurance typically offers extensive protection for a house plus more. Most policies cover possessions and basic liability lawsuits filed against the owner, too.

Who in Vermont should consider getting home insurance?

If you own a home in Vermont, you should probably have home insurance. This is a protection that almost everyone with a house ought to carry. 

After all, most residents have no single asset that’s more valuable than their house. Few could financially manage on their own if their house were destroyed.

For the many residents who have an outstanding mortgage balance, the lender likely requires that minimal coverages be in place. Regardless of any such requirement, however, it’s generally recommended to carry a home insurance policy with robust converges that protect your house and yourself well.

What type of protection do I need if I rent my home?

Whether you rent or own your home, the property—as well as its contents—should be protected with insurance. Property owners have landlord insurance, which covers the owner/ management company for property and liability issues related to the structure and common areas, such as sidewalks and hallways. However, Landlord insurance doesn’t cover damage to your personal items and it doesn’t cover accidental injuries or property damage to others that you may be liable for.

For tenants, a Renters Insurance policy can protect your personal belongings in the event that they are damaged or destroyed.  It pays to repair or replace your damaged items and covers a wide range of problems, like theft, fires, smoke, vandalism, and accidental overflow of water.  When you buy renters insurance, you have the option to choose between replacement cost or actual cash value (ACV) coverage. Replacement cost coverage is more expensive, but it’s generally the better option.

What protections does a typical home insurance policy come with?

Exact coverage offerings vary from one policy to another, but a typical home insurance policy might offer the following:

• Structural Coverage: Usually covers the physical structure of the house against damages caused by covered perils, such as fire, wind, hail and others.
• Auxiliary Structures Coverage: Usually protects other structures on the property not connected to the main house, such as a detached garage, shed or fence.
• Personal Property Coverage: Usually covers personal belongings within and around the home, including furniture, electronics, clothing and more. Many policies even extend this coverage to items that are temporarily off-premises.
• Loss of Use Coverage: Usually covers additional expenses incurred if the insured home becomes uninhabitable due to a covered event. Incurred expenses could include hotel costs, meal expenses and more.
• Personal Liability Coverage: Usually covers legal expenses if someone is injured on your property and decides to sue. This coverage also may extend to defamation and other specific kinds of lawsuits. Any coverage afforded normally applies to immediate family members living in the insured home.

What are the different types of personal property coverage?

When choosing personal property coverage, homeowners have several considerations:

First, the coverage limit of the policy determines the maximum amount that will be paid to replace lost or damaged items. Policies usually have a general personal property limit, and this is often sufficient for most homeowners. 

High-value items like jewelry, firearms and collectibles can have category-specific limits that are much lower. Homeowners who own valuable items should work with a specialized insurance agent to make sure their valuable items are fully protected. An agent who specializes in homeowners policies will be able to check a policy’s terms, and adjust the limit or add on a rider if necessary. A rider, or endorsement, adds specific protections onto a policy.

Second, personal property coverage can be either actual cash value coverage or replacement cost coverage. Actual cash value normally covers belongings up to their fair market value, accounting for depreciation. Replacement cost coverage normally pays the cost to replace items with new ones of similar kind and quality, and tends to provide a higher level of protection.

Third, personal property coverage may extend only to items within the insured premises, or to items wherever they are. Worldwide coverage usually extends protection to most other places.

What do the common abbreviations used for homeowners policies mean?

Insurance professionals often use abbreviations to denote different types of homeowners policies. Homeowners usually get HO2, HO-3 or HO-5 policies, which offer increasing amounts of protection. There’s also HO-7 for manufactured housing, HO-8 for homes that are older, and others.

A knowledgeable insurance agent can help you select the right type of homeowners policy for your residence.