ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, October 7, 1996 TAG: 9610070124
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE: MAG POFF/STAFF WRITER
FIRES, thefts and accidents don't always happen to someone else. If one day you become the other person, you will need the coverage of a homeowner policy.
Homeowners insurance does more than help you recover from a loss connected with your house, including the liability resulting from an accident injuring a visitor. A policy also can protect you if someone is hurt, or has his property damaged, because of something that you do while away from home.
People who rent their dwelling need related renters insurance because the landlord's policy provides no protection for a tenant's possessions. Besides, you will need the liability coverage when you are away from your premises.
Whether you live on a farm, in your own home, in an apartment, in a condominium or in a mobile home, different types of policies are available to fit your housing situation.
BASIC COVERAGES
*Property damage coverage protects your home and belongings if they are damaged or destroyed by a variety of causes, according to the Virginia State Corporation Commission.
Years ago, people bought fire insurance protecting themselves against just that one peril. Today a great variety of threats - wind storm, hail, vandalism and theft - are covered under the basic homeowners policy. Those are just examples; policies can vary widely in the hazards they cover.
But even what's called an "all risk" policy doesn't cover everything. For instance, no home is protected in case of war, earthquake, neglect or freezing of an unoccupied building. And damage caused by flooding must be insured under a separate policy.
*Liability coverage will pay if you cause injury to another person or damage another person's property. This coverage is not limited to accidents that happen at your home. It provides protection to you and your family wherever an accident occurs.
This coverage will protect you if, for instance, your child injures a playmate at school, your dog bites a neighbor, you hit a golf ball through the window of a nearby house, a delivery person falls on your front steps, a friend falls down the stairs in your home or you accidentally break a window at a restaurant.
When you are accused of being responsible for injury to others, the liability part of your homeowners policy will usually cover the damage and pay for a lawyer to defend you.
There are some exceptions. It will not protect you if you are sued because of something you did in your job or for something you did intentionally to harm someone else. And it will not pay for liability arising out of the use of a car or other motorized vehicles, including mopeds.
The basic limit for liability coverage is usually $100,000 for each occurrence, but you can request higher limits at additional cost.
*Medical payments coverage pays if someone is injured in your home regardless of fault. This differs from liability protection which is based on your negligence.
This section usually pays for reasonable medical expenses incurred within one year from the event for a person who is injured in an accident in your home. But the coverage does not apply to members of the household.
The medical payments portion of the policy also will pay if you are involved in the injury of another person away from your home in some limited circumstances.
Coverage limits are generally $1,000 for each person, but you may request higher limits at additional cost.
*If you must move into a motel or apartment temporarily because of damage covered by your policy, your insurance company will pay "reasonable and necessary" additional living expenses. It will not cover all of your expenses, only those beyond your normal and customary costs.
The typical policy will pay an amount up to 20 percent of the policy on your home for these expenses.
If you move in temporarily with a friend or relative, don't expect to be paid any additional living expenses.
*Homeowners insurance, but not renters' policies, will pay for damage to outbuildings such as a garage or tool shed if the cause is among the kinds of threats covered under the policy. Usually the payment is limited to 10 percent of the limit on the dwelling, but policyholders can buy higher limits.
*Personal property also is covered, usually up to 50 percent of the limit on the house itself. Lesser limits usually apply if the damage, such as a theft, happens away from home while you are traveling.
*Coverage is limited to very small amounts for certain types of property that are especially susceptible to loss, such as cash, securities, jewelry, furs, manuscripts and stamp or coin collections.
You might receive only $1,500 for all furs or jewelry stolen in a single theft, for example. A $500 limit usually applies to all securities, receivables, travel tickets and stamp collections. Typically you have only $100 coverage for money, coins or bank notes regardless of the actual amount lost.
You should ask your agent about listing all of these items as part of the policy, thus covering them individually to their full value.
TYPES OF POLICIES
Virginia has a regulation that provides minimum standards for coverages that must be included in all policies. But you can buy extra, broader or special types of insurance. Here is a summary of the different types available to you.
*The "broad form," which the state calls HO-2. This type is also called the "named peril" policy. It lists events which are covered. You will receive compensation only if your loss is caused by something specifically listed in the policy.
This kind of policy covers most, but not all, of the common causes of damage to a home or belongings such as fire, lightning, wind storm, hail, explosion and many others.
If you are considering buying this type of policy, be sure you are satisfied with the coverage it provides.
*There is another type called the "all risk" or open perils policy. It is known as HO-3. This covers every type of damage unless it is specifically excluded. Common exclusions are wars and floods, but you should check your own policy. This type of coverage is usually only a little more expensive than the named-peril policy.
*Renters insurance, which the state calls HO-4. It provides all of the coverages in the broad form on your household contents, personal possessions, additional living expenses, liability coverage and medical payments.
*The HO-5 or comprehensive form covers your real and personal property against all perils except flood, earthquake, war, neglect, nuclear accident and others specifically listed.
*The HO-6 policy is specifically directed at owners of condominiums. It insures personal property and any additions or alterations that are not insured by the owners' association. Anyone who buys this coverage must be sure that the association has a policy covering the basic structure and common property as well as liability for injuries on common property.
*The market value form, or MV policy, is designed for people in older homes such as those in Roanoke's Old Southwest neighborhood. These homes are usually constructed in a way that cannot be duplicated today after a loss.
This type of policy allows you to carry lower limits of insurance, such as the market value of the home, rather than the 80 percent of replacement cost used for newer homes. This policy contemplates returning the property to serviceable condition with the use of currently available materials, not necessarily building materials of the same kind and quality as the original.
You can also buy special policies with extra provisions for mobile homes and farms.
*Most private companies do not sell flood insurance. That means a homeowner living in an area subject to flooding, should contact: National Flood Insurance Program for information about coverage and rates for a specific area or site. The address is P.O. Box 6468, Rockville, Md. 20849. Or you can call 1-800-638-6620.
LENGTH: Long : 140 lines ILLUSTRATION: GRAPHIC: Chart by staff: Homeowners insurance premiums. color. KEYWORDS: MGRby CNB