Does the very thought of buying homeowner's insurance bewilder you? Does the idea of trying to understand your policy sound scary? An insurance policy is one that enables you to pay for a collection of promises made by a company to you (i.e. the company promises to provide cover) for very pertinent kinds of losses, up to a certain limit.
It's very important for you to know what cover you are being offered and the limits you currently have or should have. Not knowing these details could prove very costly for you later.
Vermont department of insurance advises you to buy only what you need--so that you won't have to pay for cover you can do without, and you won’t be caught with major losses that aren't covered by your policy.
There is little concept of shopping for insurance, prevalent in Vermont but one can find policies priced differently and insurance companies with diverse levels of customer service. Note that the rates for Premiums are not regulated by the State of Vermont. The State Insurance Division monitors the market to make sure it stays competitive.
Although homeowner's insurance is not required by law, if you have a mortgage, the lender will require you to have insurance - at least up to the value of your home and other structures, such as outbuildings. A homeowner's insurance protects you against two kinds of risks, within the stated limits of your policy:
- The risk of damage to your own property
- The risk of liability for injury to others
The standard types of homeowner's policies
These are often referred to by numerical designations and vary by the extent of dwelling and personal property covers provided. The liability cover however, is the same for all forms.
The Basic Coverage Form (HO-1)
As the name suggests, this form is the standard homeowners insurance and offers minimal cover. It applies to both homes and personal possessions, and offers coverage against perils like fire, lightning, vandalism and malicious mischief, and extended coverage* perils.
*Extended coverage perils are usually named in the policy and include:
- Riot
- Explosion
- Vehicles (damage caused by)
- Civil commotion
- Smoke
- Hail
- Aircraft
- Windstorm
- Breakage of glass, which is part of the building
The Broad Coverage Form (HO-2)
The Broad Form is by virtue of its name broader in terms of what it covers and this applies to both the dwelling and personal property. It includes all the covers of the basic form, plus these pertinently named perils:
- Falling objects
- Weight of snow, sleet and ice
- Damage to water heating systems*
- Volcanic eruption
- Damage from plumbing or appliances*
- Freezing of plumbing or appliances
- Damage from artificially generated currents*
* Covers are provided for perils marked with an asterisk when the cause of damage is sudden and accidental. Damage due to gradual deterioration, is excluded.
Special Coverage Form (HO-3)
The Special Coverage Form offers extensive cover compared to all the other forms. For a residence, the "risks of direct loss," are covered. This indicates that any cause of loss is covered but for those specifically excluded in the policy. These exclusions would be flood, war or nuclear accident. Personal property, however, is covered only to the same extent as in the Broad form.
The Tenants Form (HO-4; also known as Broad Coverage Form, Contents)
This form is designed to offer insurance to people who do not own the building they live in. It covers the same threats as are mentioned or listed in the broad form, but this cover is enabled only for personal possessions. This kind of insurance is inexpensive if you buy it in combination with any other type of insurance from the same agent.
The Condominium Form (HO-6)
For personal property, this form provides Broad form coverage similar to the Tenant's Form. The degree of structural coverage differs. Consult your insurance agent to learn what you can insure under the bye-laws of your condo association.
The following product is worth noting but has very limited availability:
Modified Coverage Form: This form provides minimal coverage similar to the Basic form. However, there are certain restrictions on the value of losses. Older or sub-standard homes, which would cost more than their market value to replace, would be covered under this.
COVERAGES
- Coverage A: Dwelling
- Coverage B: Other Structures
- Coverage C: Personal Property
- Coverage D: Loss of Use
- Coverage E: Personal Liability
- Coverage F: Medical Payments to Others
ADDITIONAL COVERAGES
Debris Removal, Reasonable Repair, Trees, shrubs and other plants: Offers coverage not to exceed 5% of the amount of insurance on the dwelling, Fire Department Service Charge: Commonly covered, Property Removed: Covers cost of removing property from the premises to protect it from further damage, usually for up to 30 days, Credit card, forgery, ATM and counterfeit money: Offers a number of protections up to $500 if you are a victim of theft, forgery or an unwitting recipient of counterfeit bills. There are a number of situations not covered and these may comprise of any loss or damage arising out of a dishonest act committed by you, or in connection with a business operation, Claims Expenses: Covers your insurance company's cost to defend you in the event of a lawsuit, First Aid Expenses: Covers your cost to provide emergency aid to others and Damage to the Property of Others: Covers loss or damage unintentionally caused by you.
9 Questions Vermonters often ask
Q. If you own a mini-farm, including a barn and a number of income producing animals, is this covered under a homeowner's insurance?
Have to be insured under the special farm, business or other type of multi-line (multi-purpose) policy. Some agents in Vermont specialize in this type of policy. You can contact the Vermont Insurance Division in this case.
Q. If you own a few horses, which are used for pleasure, not business and if the horse injures a neighbor on your property, will this be covered under my homeowner's policy?
A. If your pet injures someone on your property, your liability insurance will cover you to the limits implemented in your policy. Your liability coverage will be enabled if your pet injures someone on the other person's property.
Q. Is your RV / motor home covered under the homeowner's policy?
A. No. Typically, RV's can be insured via the RV or other special policy.
Q. Will your policy cover flood damage if you live close to the river?
A. No. Flood insurance is not included in the basic homeowners policy and needs to be purchased separately from your agent. For free publications about flood insurance you can contact your agent or the Federal Emergency Management Agency (FEMA) at 1-800-480-2520 or go to their web site: www.fema.gov
Q. Are frozen and burst water pipes covered by the homeowner’s policy?
A. Yes, if your policy covers damage of this nature and if steps had been taken by you to prevent such a loss. Otherwise, your claim may be denied. You have a responsibility to take precautions.
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