Thinking About Coverage

Liberty Mutual has collected the answers to many of your most frequently asked questions. Because insurance laws vary throughout the United States and Canada or coverages may not be available in some jurisdictions, the information below may not apply in all situations. The terms and definitions in your actual policy will govern any claims or questions of interpretation. Please take this opportunity to read these questions, and if you have additional questions, please e-mail our site or call your nearest Liberty Mutual Sales Office.

1.		WHAT DOES MY HOMEOWNER INSURANCE POLICY COVER? Basically, your homeowner insurance primarily covers three types of property: your house any adjacent structures (such as a garage) your personal belongings Homeowner insurance protects you from specific types of home-related accidents or incidents. The most common types include fire, theft, and vandalism. Your coverage goes beyond just taking care of your home and possessions. It also covers additional living expenses (such as hotel expenses) if your house becomes unusable for a while. You also have liability protection. If you or a member of your household is responsible for injuring someone or damaging someone's possessions, your policy covers it. The most important thing to remember when purchasing homeowner insurance is that you select the amount of coverage you will need to replace your home and property, and an amount to cover any possible liabilities. These selections put a boundary on what your policy covers. Please note that most standard policies do not include damage caused by flood. Be sure to ask your Sales Representative about whether you should buy this separate coverage.
2.		IS THE PRESENT AMOUNT OF DWELLING COVERAGE ON MY HOMEOWNER POLICY SUFFICIENT? If your policy's value is large enough for you to rebuild your house if a total loss occurred, then you are properly insured. The replacement cost of your dwelling will vary over a given period of time because of changes in material, labor costs, and inflation. It is best to review your insurance periodically to make sure you are adequately covered. Your Liberty Mutual Sales Representative will be glad to assist you.
3.		MAY I INCREASE OR DECREASE THE AMOUNT OF INSURANCE ON JUST THE PERSONAL BELONGINGS IN MY HOME? Yes, you may. Initially, your personal property coverage usually reflects 50 percent of your home coverage. It may be increased or decreased, depending upon state requirements.
4.		ARE THERE ANY ITEMS IN MY HOME NOT COVERED BY MY HOMEOWNER POLICY? Most items are covered for loss or damage as a result of specified perils or subject to stated limits. Take jewelry, for example. In the case of a jewelry theft, in most instances, the company will reimburse you up to $1,000. However, loss or damage resulting from losing a bracelet or dropping a vase, for example, would not be covered unless that item was specifically insured, also known as scheduled. There are also limits on such things as money, securities, watercraft, trailers, grave markers, furs and guns. Please check your policy for the specific coverage limits.
5.		IF MY HOME IS DAMAGED FROM A COVERED PERIL AND I MUST LIVE ELSEWHERE WHILE REPAIRS ARE BEING MADE, WILL MY INSURANCE POLICY COVER THIS EXPENSE? Yes. This coverage comes under the heading of Additional Living Expenses, a coverage that is included in homeowner and tenant policies. The amount of coverage you have for additional living expenses is generally 20 percent of the amount of coverage on your home. If you have $100,000 coverage on your home, you may have coverage for as much as $20,000 for additional living expenses. This coverage provides for expenses over and above your normal living costs.
6.		IF MY HOME OR PERSONAL BELONGINGS SUFFER WATER DAMAGE AS THE RESULT OF A PIPE BURSTING IN MY PLUMBING OR HEATING SYSTEMS, WHAT COVERAGE DO I HAVE? You are covered up to your policy limits for the resulting damage to your home and personal property, and for any additional damage caused in the course of repairing the faulty system. You are not covered, however, for the cost of repairing or replacing the system itself unless the water damage is caused by freezing. Please refer to question 7 regarding coverage for damage from freezing. Thus, in the case of a broken pipe in a wall or ceiling, you are covered for repairing the resulting water damage, and you are covered for any additional damage and expense incurred in tearing out the wall or ceiling to replace the pipe. You are not covered for the cost of the new pipe. In order for water damage to be a covered loss, it must be sudden and accidental. If it results, for example, from a slow leak over a period of weeks or months, it would not be covered.
7.		IF MY HOME OR BELONGINGS SUFFER DAMAGE FROM THE FREEZING OF MY PLUMBING OR HEATING SYSTEMS, WHAT COVERAGE DO I HAVE? You are covered for resulting damage to your home or personal property as well as for damage to the plumbing or heating system itself. If your home is vacant or unoccupied at the time the freeze-up occurs, you are covered as long as you have taken the necessary precautions to keep the building heated or have had the water turned off and the plumbing and heating systems drained.
8.		IF MY PETS CAUSE DAMAGE TO MY PERSONAL BELONGINGS, WHAT COVERAGE DO I HAVE? There is no coverage on the homeowner policy for loss or damage to personal belongings caused by a pet or other domestic animal.
9.		IS THERE ANY LIMIT ON THE INSURANCE FOR MY SILVERWARE? In most states, there is a limit. A new, simplified homeowner policy applies in most states and has a limit of $2,500. You should check your policy and if you need more coverage than the stated limit, you should consider scheduling the silverware.
10.		IF MY HOME SUFFERS DAMAGE FROM VANDALISM OR MALICIOUS MISCHIEF, WHAT COVERAGE DO I HAVE? You have coverage up to the limits of your policy, unless your house was vacant for 30 or more consecutive days immediately preceding the loss.
11.		IF I OR A MEMBER OF MY HOUSEHOLD SUSTAIN INJURY ON MY PROPERTY, WHAT COVERAGE DO I HAVE? There is usually no coverage on your homeowner policy for injury sustained on your property by you or a member of your household. However, liability coverage may apply if an insured is legally liable for the injury.
12.		IF A NEIGHBOR OR VISITOR SUSTAINS INJURY ON MY PROPERTY, WHAT COVERAGE DO I HAVE? You have coverage, up to your policy limits, under the liability portion of your homeowner policy if you are legally liable for the injury. In addition, the company will pay, up to applicable limits, any bills or reasonable medical expenses of the neighbor or visitor's injury. However, certain exclusions may apply, depending upon state law or policy provisions.
13.		IF I CONDUCT A BUSINESS AT HOME, IS MY BUSINESS PROPERTY COVERED BY MY HOMEOWNER POLICY? There is coverage up to $2,500 for property on the "residence premises" that is used at any time or in any manner for a "business" purpose.
14.		IF THERE IS A WINDSTORM AND THE TREES IN MY YARD ARE DAMAGED, WHAT COVERAGE DO I HAVE? There is no coverage under the homeowner policy for windstorm damage to trees or other shrubs.
15.		DOES MY POLICY COVER REMOVAL OF DEBRIS FROM MY PROPERTY? Yes, it covers expenses incurred in removal of debris from your covered property resulting from a covered loss. An example of this would be the expense incurred in removing shingles that have blown off your roof.

Insurance for Special Circumstances

16.		HOW CAN I INSURE SPECIAL ITEMS? The only way to obtain broader coverage, no matter what the circumstance of the loss, is to schedule the item in your homeowner policy. Schedule means you specifically describe and insure the item. You will pay an additional amount of premium for the scheduled item depending upon the amount it is insured, and you will be covered, in most instances, when any loss occurs. Items that are typically scheduled are jewelry, furs, art objects, silver, antiques, coin and stamp collections, and photographic equipment.
17.		WHY IS A LOSS CAUSED BY NUCLEAR HAZARD EXCLUDED FROM MY HOMEOWNER POLICY? You are already covered for a loss caused by nuclear hazard under insurance policies issued to the owners and operators of nuclear facilities, self-insurance maintained by them and an indemnification obligation on the part of the United States Government. This mechanism was worked out in a law known as the Price-Anderson Act, passed by Congress in 1957. The insurance industry and Congress concluded that this is the best way to insure against nuclear hazard.
18.		DOES MY HOMEOWNER POLICY PROVIDE PROTECTION AGAINST LIABILITY FOR MY RECREATIONAL MOTOR VEHICLES? It depends upon the circumstances. A recreational motor vehicle is a golf cart, snowmobile, or other motorized land vehicle designed for use off public roads and not subject to motor vehicle registration. Except in the case of a golf cart, you have liability protection as long as the bodily injury or property damage occurs on the insured premises. You have liability protection for your golf cart only while it is used for golfing purposes.

Understanding What It Costs

19.		DO HOMEOWNER INSURANCE PREMIUM PAYMENT PLANS COST MORE? Yes, they may. Like any installment plan, insurance premium payment plans may include interest or fees. You should ask your insurance representative how much the interest or fees will be.
20.		CAN MY INSURANCE COMPANY ASK ME FOR MORE MONEY ONCE WE AGREE ON A POLICY? Most insurance companies write non-assessible policies. A non-assessible policy is one for which there is only one rate. Therefore, if an insurance company has a year full of catastrophes, it cannot ask the policyholder for more money. On an assessible policy, the insurance company could ask the insured for more money to cover losses. Liberty Mutual writes only non-assessible annual policies on which rates may increase at renewal, but you will never have to pay more for insurance you have already purchased.

General Policy Questions

21.		MAY I CANCEL MY HOMEOWNER INSURANCE WITH MY COMPANY? Yes, you may cancel your insurance at any time and the appropriate amount of paid premium will be returned.
22.		MAY MY INSURANCE COMPANY CANCEL MY HOMEOWNER POLICY? Yes, although this is something that insurers rarely do. There are legal provisions that allow an insurance company to cancel your homeowner insurance. The most frequent reason for cancellation is non-payment of premium by the insured. Insurance companies must have good reason to cancel a policy, and ample notice must always be given.

More Terminology...

23.		WHAT IS "INSURANCE-TO-VALUE"? Insurance-to-value simply means having enough insurance to cover the actual replacement value of your home should a loss occur. If a loss occurs, you want enough insurance to cover the total costs of replacing your home. The cost to rebuild your house may be different from the actual market value of the property.
24.		CAN YOU DEFINE "REPLACEMENT COST" AND "ACTUAL CASH VALUE"? Replacement cost is the amount of money you would have to spend to replace your home with another of like kind and quality on the same site where your home was destroyed. Actual cash value (ACV) is the replacement cost less depreciation. To determine the actual cash value, the general condition, repair, and character of your home are taken into consideration. Replacement cost and actual cash value are generally used in reference to the home only, not including the land.
25.		WHAT IS COINSURANCE? Coinsurance is a provision in your policy which states that if you fail to carry at least 80% of the replacement cost of the property, you may receive a reduced loss settlement. Please keep in mind that the coinsurance clause relates to the value of the property when the loss occurs, not when the policy was written. In general, most policies have a coinsurance provision. Please refer to the next question (26) for an example.
26.		COULD YOU GIVE ME AN EXAMPLE THAT EXPLAINS COINSURANCE? Assume that property valued at $100,000 is insured for only $40,000 and a loss of $40,000 occurred. If the policy had no coinsurance clause, you would get $40,000. If the policy contained the usual 80% coinsurance clause, you would get only $20,000. Because you carried only one-half ($40,000) of the 80% ($80,000) insurance required by the coinsurance clause, you would receive only one-half ($20,000) of the $40,000 loss.
27.		WHAT IS THE DEFINITION OF "DEDUCTIBLE?" Deductible is the initial portion of the loss for which the policyholder is responsible. If you have a $100 deductible on your homeowner policy, you are responsible for the first $100 of the loss. The company will only pay that portion of the loss in excess of $100.
28.		WHAT IS THE DEFINITION OF "LOSS AWAY FROM PREMISES?" Loss away from premises can be defined as a loss incurred by the policyholder while he or she is away from home. An example of this is a theft from a motel room, perhaps while a policyholder is on a vacation or business trip.

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