Insurance World

Individuals planning on purchasing a home spend weeks if not months picking the perfect neighborhood, floor plan, and then home before they even consider purchase. In a similar way, buyers will shop around and compare the interest rates offered them on mortgages. Yet, when it comes to homeowners insurance, the norm is to still simply to defer the decision-making to the agent. But just as you wouldn’t consider purchasing your home without first researching and planning, so also should homeowners insurance buyers consider the major options available when it comes to buying a homeowners policy.

In its simplest form, homeowners insurance is an agreement between you, the homeowner, and an insurance company, that in exchange for you making monthly payments, they will compensate you for any significant damage that affects your home. This at least was the form of original homeowner’s policies. Today’s policies are more complex, both covering, and excluding a wide range of situations.

Broadly, a homeowner’s policy covers four major areas of liability. These include:

1.
Coverage for the structure of the home

2.
Coverage for the contents of the home

3.
Liability protection

4.
Temporary displacement costs in the event of disaster

Coverage for the structure

This structural protection is what most people commonly conceive of when they think about homeowners insurance. Purchasing a home is a major investment in the lives of most individuals, and as a consequence, the threat of loss of that property, would be so devastating financially that it motivates individuals to seek out insurance as a means of protecting their financial interest. But despite common perceptions to the contrary, homeowners insurance does not cover any and all damages to the home. While each policy varies slightly, most commonly floods and earthquakes are excluded from coverage. That means that if you have a standard policy and your home floods, you will not be recompensed by your insurance company for your loss. On the other hand, other disasters such as hurricane, fire, and hail are typically covered under the standard policy. In addition, most standard policies cover other structures that are fixed or attached to the home, most commonly garages or porches. While these general guidelines hold true for most policies, the variance between insurance providers is significant enough that you should investigate the particulars of what is covered, and more importantly what is excluded regarding coverage for the structure of the home.

Coverage for Personal Belongings

Homeowner’s insurance policies cover not only the structure of a home, but much of its contents as well. Because the coverage to items within the home is not complete, however, it is important to know the limitations of your policy. The industry standard is between 50 and 70% of the value of the policy. That is, if you have the structure of your home insured for $100,000 that policy typically covers the value of your possessions up to $50,000 or $70,000 if they are stolen or damaged in non-excluded circumstances. But, just as with the structure of the home, this coverage is not all-inclusive. For example, there is typically a limit on the amount your insurer will pay out on high dollar items such as jewelry or expensive clothing. This limit can vary but typically maxes out at $2,000. An oft forgotten possession related to the home, is the landscaping. Under most standard policies insurance that will recompense the insured for up to $500 in landscaping damage is also covered. But once, again payment can only be attained if the causal factor (i.e. fire) was covered in the first place.

Liability Protection

Moving farther away from most common conceptions of a homeowner’s policy, it is important to note that policies also cover personal liability for you, your family members and pets. This means that by virtue of owning the homeowners policy you are covered in case, for example your dog tears up your neighbor’s lawn, or far worse, if your neighbor hurts himself while visiting your home. Even more in this aspect of the policy than in any others, the exceptions are vitally important to understand. The amount of liability coverage that comes with a basic policy is a rather standard $100,000. But depending on the exclusions, that similar number belies a world of difference when it comes to actual personal protection.

Temporary Displacement Compensation

If an accident befalls your home and you are unable to inhabit your home temporarily, your homeowners insurance provider will cover the costs of your housing and some additional costs during the interim. Included under this coverage, for most standard policies are things like food, and other basic living expenses. But some policies go farther by compensating you for slightly more extravagant costs like clothing purchases. The coverage for displacement costs varies here more than anywhere else. Some companies use a percentage calculation to determine how much in temporary displacement compensation you can receive to cover hotel bills, food, and the like. This number is most typically set at 20% of the value of the insurance on the structure of the home. Other companies take a different approach, however. They offer unlimited, or at least higher valued, temporary displacement compensation, however, these benefits are time-dependent. This means that once your coverage time expires, you receive no more benefits, no matter the costs you may still be incurring.

In all of these categories, insurers offer a wide variety of options dependant upon your willingness to pay. For example, you can up your protection for high-dollar possessions if you have a lot of jewelry. In the same way, if you are particularly concerned about liability you can pay extra for higher coverage and the same is also true of temporary displacement coverage. While what I have outlined here, provides you with a basic framework for understanding the various components of homeowners insurance and the general standards of the industry, the differences between individual policies can vary widely. Consequently, it is important for those considering the purchase of homeowners insurance that looking into the particulars of what has been covered here be made a priority. Only by understanding the precise offerings of competitors policies and understanding their functions, can you the customer come to find the policy that best suits your needs and those of your family.

When evaluating potential job offers, health insurance benefits are most likely one of the first issues you inquire about, second only to salary. Indeed, if you have a large family or a history of medical problems, this may be the first thing you ask about.

Of course, health insurance benefits will vary by health insurance plan, so if you are unsure about any aspect of your health insurance options, it’s important to get help from either your Human Resources department at work or a health insurance broker if self-employed or unemployed. It’s easy to make the mistake of assuming that features or benefits exist when they don’t. If your assumptions are wrong, you could be left facing insurmountable medical bills. This is especially true for low cost, cheap health insurance.

In a perfect world, all individual or family health plans would pay for every health issue that may arise—pregnancy, blood transfusions, sick and well care, minor and major surgery, hospital stays, etc. But the truth is health insurance benefits typically are limited and they seldom will cover 100% of the costs, which is why it’s so important to read the policy’s fine print. You’ve got to know exactly what is and is not actually covered.

The majority of valid health insurance policies provide a minimum level of coverage that typically includes major medical expenses such as hospitalization and emergency/urgent medical care. Some of the most sought after additional benefits include annual physical exams, referrals to and treatment by specialists as needed, hospitalization and emergency care, prescription drug coverage, laboratory work including blood testing and x-rays, maternity benefits, prenatal and well-baby visits, vision benefits, and dental care.

Health insurance benefits less commonly include mental health care and treatment, rehabilitation services for drug and alcohol abuse, home health care, hospice care, physical therapy, and chiropractic care.

One thing to keep in mind as you evaluate various health insurance benefits is that the primary purpose of any health insurance policy is to protect you from a major financial loss - not to protect you from spending “small” sums of money on office visits. These small expenses can be a burden, but they generally will not break you.

To conclude, with something as important as health insurance and the impact it can have on you and your family, be careful not to make any assumptions. Granted, a typical health insurance policy is not exactly a “beach read”, but in the long run it pays to have a clear understanding of your actual benefits. At a minimum, you need to have someone from your Human Resources department or your broker if you are purchasing your policy as an individual, go through and summarize each section of the plan. Again, this may not be your idea of a good time, but in the end it just may save you a bundle.