So, you went online and bought some home insurance, everything is good to go!
…Maybe?
Insurance is not generic. In fact, insurance is specific.
It’s specific to what it is insuring and for whom it is insuring. Let’s talk about homeowner’s insurance. This is one of the most common insurances that gets mistaken as a “one fits all” type of coverage. And, I don’t know about you but I certainly would not want to pay for something that I wouldn’t be able to use when I need it.
In this post, I will talk about how the use of a home can determine what type of coverage is correct and needed.
Disclaimer: While most of the coverage in this post is standard in most insurance companies in New York State, it can vary and you should ALWAYS check your insurance policy and confirm your coverages with your licensed agent or insurer.
Scenario 1- I live in my home that I own full time.
I need a … maybe you guessed it… Homeowners Policy! A homeowner’s policy covers the activity of the person who owns the home residing there full time or primarily. Generally, a homeowner’s policy is a “package policy” that always comes with the following coverages. (may vary by state) Coverage for other structures, this means any free standing, permanent structure that is not attached to your home. This would include your she-shed, detached garage/man cave, and in some cases your pool or children’s’ play house or tree house. This policy also would cover the items you own inside of this home as well as the items of the people who permanently reside in the home. It would also cover the cost to live elsewhere should you home become inhabitable due to a covered loss. The next thing a homeowner’s policy would cover is liability and medical payment for anyone injured on your property or due to your actions.
Scenario 2- I rent my home to others, I do not live in it.
Generally, the policy you should acquire is called a Landlord policy or a Dwelling Fire policy. (name varies by company) This type of policy covers the “exposure” of you renting your home to others, some companies will even cover an Airbnb. However, Airbnb coverage should NEVER be assumed as it is still “new” to insurance companies and often excluded. Always specifically ask your agent or carrier if Airbnb is covered, should you choose to use that platform.
Landlord policies have different coverages in their “packages as well.” For example, these policies offer lesser or no coverage for personal property. Generally, if you are renting out your house, you do not own the contents or property inside. However, if you are renting your home out fully furnished, it is important to let your agent know so they can account for coverage for your furniture and belongings. This policy can also cover some of the things a homeowner’s policy covers such as: other structures- any other structure on your property that is not attached to your house. Loss of Rents or loss of income from rent when your home is damaged by a covered loss and is inhabitable. Liability and Medical Payments, often referred to coverage for slips and falls and immediate medical care.
Scenario 3- My Vacation, Weekend or Summer Home (Secondary Home)
This one can get a little tricky and absolutely varies by company. ASK YOUR INSURANCE AGENT if you have sufficient or proper coverage for your “secondary home.” Perhaps your thinking, why isn’t this article giving me an answer? Here’s the truth, (I tell all my clients this and you should’ve absolutely heard this from your agent) insurance varies by company and it is based on specific information. I can tell you that out of my many carriers, not one of them categorizes this scenario with the same name for a policy. Some will say it’s a homeowner policy, some will say it’s a dwelling fire policy, and some will say that they won’t even offer a quote on this. All I’m saying is- if you have this type of home, pick up the phone, call your agent and talk to them to make sure you have adequate coverage. Depending on how your carrier decides to cover this home, you should still have the option to add the same coverages as the two previous scenarios we’ve discussed. (other structures, personal property, loss of use, liability and medical payments.)
Scenario 4- Condo or Townhome
All I will say is, reference scenario 3… Call your insurance agent! This coverage type and description varies by company and is very specific. Make sure to have all information on the condo and town home available such as: from what point do you own your condo or townhome? From the sheet rock and inward, or some framing? Also, does your condo association require any specific coverages? If so, have that handy to pass along to your agent.
Scenario 5- I rent the space where I live.
Renters policy! Yes- you abso-stinkin-lutely should get a renter’s policy. On average, renters’ policies range around $100 a year. So, we’re talking about .27cents a day. Why get a renter’s policy? Well your landlord has a policy that covers their home or apartment that you live in and their property inside. Their policy does not cover your items because they do not own your items or have what we call “insurable interest.” God forbid somethings happens; you would not have coverage for your personal property…unless you have a renter’s policy! A renter’s policy covers your personal property. We always recommend taking an inventory of what you own to get an idea of how much coverage you will need. For more expensive or significant items, you should make a list of them and let your agent know to “schedule” these items. (This means setting an exact amount aside for a specific item.) Items people often “schedule” are jewelry, art, firearms, musical instruments or anything else rare or precious. Next, a renter’s policy covers “loss of use.” This pays for you to live elsewhere should you living space become unhabitable due to a covered loss. Renters policies also cover liability or medical payments to protect you should someone be injured on your property or due to your actions.
So, I’ll wrap this up the same way I began. Insurance is not generic, it is specific.
Always be upfront about your living situation and the use of your home. Because at the end of the day, no one wants to pay for insurance that would not cover them because it is the wrong kind of insurance. I encourage you to talk to your agent, ask them questions and learn about what coverage is best for you.