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Copyright © 1995-2000 Robert T. Heineman . All rights reserved. Last updated 10/18/2000. License # 0581377.
Central station burglar alarm
A burglar alarm that is connected to an alarm company or the police department. If the alarm goes-off, the alarm company or the police will respond.
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Safety features
Examples of other safety features are: deadbolt type locks on your exterior doors, supplemental locks on your sliding doors and windows, fire extinguishers in home and garage, smoke detector, etc..
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Dwelling
Dwelling is the building or house itself. Please enter the dollar amount you estimate it would cost to rebuild your house, if it were totally destroyed. If you are not sure of this amount, please enter your current coverage.
The dwelling coverage is not the same as your home's sales price. The sales price includes the value of the land, your house is sitting upon. The dwelling amount should not include the value of the land as land cannot be insured. The dwelling amount will therefore usually be less than the sales price of your home.
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Separate structures
Separate structures are any structures not attached to your house. For instance, fences, walkways, gazebos, detached garages, guest house. etc.. Most home policies include separate structures automatically as part of their policy equal to 10% of the dwelling coverage.
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Personal property
Personal property is the contents of your home. Furniture, appliances, clothing, electronic equipment, etc..
There is usually limited coverage for certain types of "high risk" personal property. Coverage is limited for money, jewelry, watches, furs, computers, and items with high precious metal content (silverware). It would be wise to talk to your agent about coverage for these items to be sure you are properly covered.
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Loss of use
Loss of use pays for your hotel or lodging bills, and other unusual expenses if you are not able to live in your home as a result of fire or other covered peril.
An example of an unusual expense: Farmers paid for the cost of kenneling a client's dog during the Laguna fires a couple of years ago, when the fires destroyed the policyholder's house--and dog house.
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Personal liability
Personal liability protects you and your family against a variety of personal (non-business) law suits.
For instance, it protects you if a non-family member slips and falls on your property and sues you.
The protection is "world wide". So you and your family have protection for personal liability both on and off premises. For example, if you are playing a game of golf in England and hit someone with a golf ball, and they sue you-- you are covered!
How much personal liability coverage should you carry? A minimum of $300,000 is fairly typical for most homeowners. If you have a high paying job, or hold business or personal assets in excess of $300,000, higher liability is advisable.
As a rule of thumb, your personal liability should probably be at least equal to your net worth. If you need liability in excess of $1,000,000 you should talk to your agent about a personal umbrella. Personal umbrellas typically run in the $300-$500 annual price range.
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Guest Medical
Guest medical pays for medical expenses of non-family members if they hurt themselves on your property regardless of fault.
If a non-family member hurts themselves on your property, medical payments will pay for their injuries even if you are not legally liable.
The coverage limits are relatively low because if you are sued by the injured person, your personal liability coverage kicks in, and you have coverage for $300,000 or whatever limit you chose.
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Earthquake
Earthquake pays to cover your home if it is damaged by an earthquake. If you do not carry earthquake coverage and an earthquake damages your home, you have no recourse against your insurance company.
The coverage is usually designed to cover the dwelling only with little or no coverage for separate structures, personal property and living expenses.
Earthquake covers major, catastrophic earthquakes and as such has a high deductible-- typically 15% of the dwelling amount. So a $100,000 dwelling policy typically has a $15,000 earthquake deductible.
A common question asked is what happens if an earthquake causes a fire and my house burns down? Answer: the fire portion of your policy will cover your loss whether you do or do not carry an earthquake coverage. Your fire deductible will also prevail rather than the 15% earthquake deductible.
You should strongly consider buying earthquake coverage if you live in an earthquake prone area!
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Deductible
Deductible applies to property coverages (dwelling and personal property), not liability or guest medical.
It is recommended that you use your insurance to cover only catastrophic losses, not small losses. As such, a minimum deductible of $1,000 is recommended.
Low deductibles have two disadvantages: they raise the cost of your insurance, and they allow you to place small claims with your insurance company.
The ability to place small claims with your insurance company is a disadvantage because you may be canceled by your insurance company, if you submit two or more claims in a three year period. You will then usually be forced to insure with another carrier that has higher rates and inferior coverages.
Insurance works best for catastrophic, unexpected claims. Higher deductibles save you money on your annual premium, and recognize the economic principle of submitting claims only for large, unanticipated problems.
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