Questions about home owners insurance liability ?
Monday, July 20th, 2009 at
5:21 am
hiba asked:
I did some research on home owners insurance, what is covered, what’s not covered. I also figured what was the dollar amount for the total square footage replacement value and that is 750 dollars. Most policies said not to include the value of the property.So , I didn’t. The 750 dollar amount does not include any jewelry, yet they say that medical liability coverage should only be 3000 to 5000 thousand. Why is that ? Since medical bills or expenses incurred from someone getting hurt on your property could easily exceed these amounts ? Could the liability amount on the policy be more if I want more coverage for someone maybe getting hurt on my property ?
mbrcatz, 750 is dollars per square foot to replace the dwelling and contents.
I did some research on home owners insurance, what is covered, what’s not covered. I also figured what was the dollar amount for the total square footage replacement value and that is 750 dollars. Most policies said not to include the value of the property.So , I didn’t. The 750 dollar amount does not include any jewelry, yet they say that medical liability coverage should only be 3000 to 5000 thousand. Why is that ? Since medical bills or expenses incurred from someone getting hurt on your property could easily exceed these amounts ? Could the liability amount on the policy be more if I want more coverage for someone maybe getting hurt on my property ?
mbrcatz, 750 is dollars per square foot to replace the dwelling and contents.
Tagged with: Insurance Liability • Medical Coverage • Square Foot
Filed under: Homeowners Insurance
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Homeowners insurance contains many different “types” of coverage. I will try to explain the major ones:
Within a homeowners policy, you will have one limit for “liability” coverage. Liability insurance is insurance to protect you against a suit or claim that can be made against you by someone else. In some states your homeowners insurance will protect you against claims that do not just arise out of home ownership, i.e. claims for libel, slander, defamation, etc. If you want a lot of “liability” coverage, consider buying an umbrella (on top of your homeowners insurance). A million dollar umbrella will often cost just a couple of hundred bucks and is a cheap way to get that coverage.
Another kind of coverage in a homeowners policy is “medical expense” coverage. This would cover the medical expenses of people who are hurt in your home without regard to fault (i.e. if your mother fell on your stairs and broke her leg, someone gotten bitten by a dog). If their bills are really high, they will be covered by their health insurance and/or if they sue you by your liability insurance.
Another section of it will cover the cost of rebuilding your property if there is a fire, flood, hurricane, etc. – it costs a lot less than $750 a square foot to rebuild unless you live in a mansion. There are often deductibles.
Another section or type of coverage is for contents – your furniture, jewelry, artwork, etc. Normally there is a limit on how much you can claim for esp. valuable property – i.e. cash, jewelry, etc. – unless you purchase extra coverage for those items, i.e. a wedding ring.
Other coverages are flood, sinkhole, and loss of use. The last one pays for you to have a place to live while your place is being fixed after a loss or damage, such as after a hurricane or fire damages your place so that you can’t live there for a while. Hope that helps.
Homeowners policies have 2 types of medical coverages.
Medical Payments and Liability.
Medical Payments is usually no more than 5000. It pays for medical bills (for non-residents of the household) that are injured on the property. This coverage pays regardless of fault. It does not pay for pain/suffering or lost wages. It’s sort of a make nice coverage. For example, I am helping you build a playhouse for your child. I miss the nail and hammer my thumb instead breaking it and requiring a trip to the ER or I trip over my own feet walking down your steps (that have nothing wrong with them).
Liability coverage is usually seen in amounts of 100,000 or 300,000. This pays for bodily injury/property damage that happens as a result of your negligence. This coverage will consider pain/suffering and lost wages. For example, your dog bites me or I trip on your loose step and fall injuring myself.
As far as the jewelry goes — if you have valuable pieces you will want to speak to your agent about scheduling the jewelry onto your policy. This is done with a “floater” or an Inland Marine policy. The homeowners policy does provide limited coverage for jewelry, but if you have really nice pieces – its a good idea to endorse them onto your policy.
As far as land goes — the homeowners policy does not provide coverage for land. It is specifically excluded. So there is no reason to include the value of your lot in the coverage amount.
How much insurance to get?
Coverage A is the amount of $ to rebuild your home. This coverage pays for the residential structure itself. You want your coverage A limit to be enough to rebuild your house exactly as it is – with the same siding and finishes. You want the cost for a General Contractor to come in and completely rebuild. You can also purchase an endorsement that will automatically increase this coverage limit each year. This is a good thing to have as the cost of building materials increases each year. A house that cost 95,000 to build 5 years ago may cost 100,000+ to build now.
The other coverage limits (B,C,D) are a % of the Coverage A limit.
Coverage B- is for other structures on the property. This includes swimming pools, outbuildings, fences.
Coverage C – is for contents. Your personal property. A rule of thumb- if you would take it with you in a move — it’s contents. So your clothing, this swing set in the yard, the lawn mower, the dishes etc.
Coverage D – Loss of Use. Should you suffer a loss and your home be damaged to the point that you can not live in it- Coverage D kicks in to help out with your increased expenses. For example- you have a grease fire and have to rent an apartment for a month while your home is rebuilt. You continue to pay your mortgage but now have the 1 month apartment rent. The rent is an increased expense. Coverage D would pay for this.
Coverage E- Liability coverage (discussed above)
Coverage F- Medical Payments coverage.
This is pretty general information and can be affected by the type of policy you purchased. Your agent can give you specific information about your policy.
OK, you mean, don’t include the value of the LAND. Which is fine, as it won’t burn down.
The homeowners rate is based on the DWELLING, which is what I assume you mean when you say $750. Although that can’t be the real number – you can’t build a house for $750. Heck, you can’t build a shed for that.
Medical is NOT liability – it’s “medical payments to others”, and it’s a NO FAULT coverage. If someone’s injuries are over that, and they SUE you, proving that you are NEGLIGENT, then your “personal liability” limit kicks in. That’s the big number. So, there are TWO parts to liability section – the “medical payments” which can be as low as $250, and the “personal liability” which is the big number – it starts at $50,000 and only goes up from there.
And you REALLY need to be discussing this with your agent. Trying to buy direct, is probably going to end up backfiring on you at claim time, as you won’t know which endorsements to add to your policy to best suit your risk factors.
First off contents have nothing to do with the per square foot cost to build a home. What is put inside a house has next to nothing to do with how one constructs a home, unless you are building a wing of your home to house a 100 year old Steinway grand piano and you want perfect acoustics, even then you wouldn’t include the cost of the Steinway in the cost to rebuild the wing. The average person is constantly adding, removing and replacing contents in their home, however this doesn’t change the square footage, the quality or quantity of building materials used to construct the actual home. Placing a 60″ plasma TV in a house doesn’t change the fact that the walls are made of cheap drywall and silly string is being used as wiring.
As for the liability limit you’d be amazed how even a minor injury can turn into a long saga of rehabilitation, lost wages, pain and suffering, medical bills, loss of future earnings, etc. Keep in mind this limit also includes the cost to defend you if the case is brought to court.