Frequently
Asked Questions - Homeowner
While reasonable efforts
have been made to ensure that this information is accurate,
it is general in nature and may not apply to your specific
situation. Please feel free to call us with any question
you might have regarding your specific situation.
1. I
AM CONFUSED ABOUT THE AMOUNT OF HOMEOWNERS INSURANCE COVERAGE I
SHOULD BUY FOR MY HOME. HOW MUCH IS ENOUGH?
2. WHAT
IS THE DIFFERENCE BETWEEN ACTUAL CASH VALUE, REPLACEMENT COST
AND MODIFIED OR FUNCTIONAL REPLACEMENT COST?
3. MY
HOMEOWNERS POLICY CONTAINS COVERAGE FOR SPECIFIC (SCHEDULED)
ITEMS. WHAT HAPPENS AT THE TIME OF A LOSS?
4. MY INSURANCE
COMPANY JUST NOTIFIED ME THAT THEY ARE NOT RENEWING MY POLICY.
CAN THEY DO THIS AND ARE THEY REQUIRED TO SEND ME A NON-RENEWAL
NOTICE BY CERTIFIED MAIL?
5. MY INSURANCE COMPANY
DID NOT RENEW MY POLICY. WHERE ELSE COULD I PURCHASE INSURANCE?
6. MY HOME SUSTAINED A WATER
LOSS LAST WINTER DUE TO MELTING ICE DAMS ON THE ROOF. WHAT
WOULD BE COVERED UNDER MY HOMEOWNERS POLICY?
7. MY HOME WAS RECENTLY BROKEN
INTO AND I DO NOT HAVE SALES RECEIPTS FOR THE STOLEN ITEMS.
WHAT WILL THE INSURANCE COMPANY ACCEPT FOR PROOF OF OWNERSHIP?
8. WHEN CAN AN INSURANCE
COMPANY CANCEL MY HOMEOWNERS COVERAGE DURING THE POLICY TERM?
9. I HAVE SPECIFICALLY INSURED ANTIQUE
ITEMS LISTED ON MY HOMEOWNERS POLICY. IF I HAVE A TOTAL LOSS,
WOULD THE INSURANCE COMPANY PAY ME THEIR INSURED VALUE?
10. DURING A STORM, A TREE
FROM MY NEIGHBOR'S YARD FELL AND DESTROYED MY FENCE. DOES
MY HOMEOWNERS POLICY PAY FOR THE DAMAGE OR DOES MY NEIGHBOR'S
POLICY?
11. RECENT RAINSTORMS HAVE
FLOODED AND DAMAGED MY BASEMENT. IS THERE ANY COVERAGE UNDER
MY HOMEOWNERS POLICY?
12. THE FOOD IN MY FREEZER WENT
BAD BECAUSE I LOST POWER IN MY HOME. DOES MY HOMEOWNERS POLICY
PROVIDE COVERAGE FOR THIS?
13. INSURERS WILL NOT OFFER ME COVERAGE
BECAUSE I HAVE A DOG OF A PARTICULAR BREED. CAN THEY DO THIS?
ANSWERS
1. I AM CONFUSED ABOUT THE AMOUNT OF HOMEOWNERS INSURANCE COVERAGE
I SHOULD BUY FOR MY HOME. HOW MUCH IS ENOUGH?
Most people find that "enough" means a sufficient
amount to rebuild their home. Remember that the foundation and
the land are not covered under the policy and therefore will
not figure into an insurance settlement. When determining the
replacement cost of your home, do not use the sale price, the
tax assessment or the value the mortgage company calculated.
All these can vary greatly from the construction costs. Also,
if your home is non-standard, such as a home with unique features
including ornate or hand-carved woodwork, stained-glass windows,
etc., make sure you bring this to your agent’s attention.
These are considerations that might not be addressed in a standard
homeowners’ policy replacement valuation, unless you bring
it to your agent’s attention prior to the underwriting
of the policy. If you don’t, you may discover you are underinsured
when you have a claim. You should also evaluate your personal
belongings and ask your agent about the options for covering
these items. Finally, most homeowners’ policies include
personal liability protection. Be sure to speak with your agent
concerning your liability coverage needs.
2. WHAT IS THE DIFFERENCE BETWEEN ACTUAL CASH VALUE,
REPLACEMENT COST AND MODIFIED OR FUNCTIONAL REPLACEMENT COST?
Replacement Cost is the amount to repair or replace the damaged
property using materials of like kind and quality, without deduction
for depreciation. Depreciation is the loss of value that develops
as an item ages or wears. Actual Cash Value is the replacement
cost of an item, less the amount for depreciation. A new option
available to consumers is modified or functional replacement
cost. At the time of a loss, modified replacement cost will restore
the home to a functional condition. This may mean that unique
features in your home prior to a loss will be replaced with items
that serve the same function, but are not aesthetically the same.
3. MY HOMEOWNERS POLICY CONTAINS COVERAGE FOR SPECIFIC (SCHEDULED)
ITEMS. WHAT HAPPENS AT THE TIME OF A LOSS?
In most cases, insurance companies have the option to replace
the item, if possible, through their vendor of choice. They do
this because they generally can replace your item at less cost
because of their ongoing business relationship with a specific
vendor. Should you decide not to replace the item, your insurer
may pay you only the amount that they would have spent to replace
the item through their vendor. Fine art items are generally covered
for the scheduled amount in the policy.
4. MY INSURANCE COMPANY JUST NOTIFIED ME THAT THEY ARE NOT RENEWING
MY POLICY. CAN THEY DO THIS AND ARE THEY REQUIRED TO SEND ME
A NON-RENEWAL NOTICE BY CERTIFIED MAIL?
Under Massachusetts law, an insurer is not required to write
or renew your policy. However, if your insurer decides not to
renew your policy, they must notify you of their decision at
least 45 days prior to the policy’s expiration date. Your
insurance company does not have to send you a notice by certified
mail. They are only required to use first-class mail to the address
listed on your policy.
5. MY INSURANCE COMPANY DID NOT RENEW MY POLICY. WHERE ELSE
COULD I PURCHASE INSURANCE?
You have several options if your insurance is not renewed. First,
you can check with your agent to see if he/she writes homeowners
policies for other carriers. Second, you can inquire about obtaining
insurance through the Massachusetts Property Insurance Underwriting
Association (FAIR PLAN). It makes insurance protection available
to individuals who are having difficulty getting insurance for
their home. You can contact the FAIR PLAN directly. Their phone
number is (617) 723-3800 or 1-800-392-6108.
6. MY HOME SUSTAINED A WATER LOSS LAST WINTER DUE TO MELTING
ICE DAMS ON THE ROOF. WHAT WOULD BE COVERED UNDER MY HOMEOWNERS
POLICY?
Generally damage to both the exterior and interior of a home
resulting from weight of ice and snow or ice dams is covered
under a homeowners policy. However, only the area damaged in
the loss will be covered. Further damage sustained due to wear
and tear or neglect will not be covered.
7. MY HOME WAS RECENTLY BROKEN INTO AND I DO NOT HAVE SALES
RECEIPTS FOR THE STOLEN ITEMS. WHAT WILL THE INSURANCE COMPANY
ACCEPT FOR PROOF OF OWNERSHIP?
If the actual receipts are not available, insurance companies
generally will accept photos, warranties, owners manuals, cancelled
checks, credit card receipts, bills, servicing agreements, even
video tapes, as proof of ownership. We suggest that you consider
video taping your home before a loss.
8. WHEN CAN AN INSURANCE COMPANY CANCEL MY HOMEOWNERS COVERAGE
DURING THE POLICY TERM?
According to Massachusetts General Laws Chapter 175, Section
99 (12), your policy can be cancelled for these reasons:
1. Non-payment of premium;
2. Material misrepresentation/fraud;
3. Conviction of a crime arising out of acts increasing the hazard
insured against. (For example, conviction for illegal storage
of fireworks);
4. Discovery of willful or reckless acts or omissions by the
insured increasing the hazard insured against. (For example,
not getting a gas leak fixed);
5. Physical changes in the property insured which result in the
property becoming uninsurable. (For example, should the home
become vacant for more that 60 consecutive days, this is automatically
assumed to be a greater exposure to vandalism and damage); and
6. A determination by the Commissioner of Insurance that continuation
of the policy would place the insurance company in violation
of the law.
9. I HAVE SPECIFICALLY INSURED ANTIQUE ITEMS LISTED ON MY HOMEOWNERS
POLICY. IF I HAVE A TOTAL LOSS, WOULD THE INSURANCE COMPANY PAY
ME THEIR INSURED VALUE?
Your insurance company would first confirm the value of the
items with one or more independent antique dealers. You should
then be paid a dollar value based on the dealer(s) estimate of
the worth of the antique items. If you disagree with the settlement
offered by your insurer, then you can follow the dispute resolution
process outlined in your policy. There is a simpler way. Get
appraisals and have your agent establish the stated values in
the policy. You should also keep your appraisals up-to-date.
10. DURING A STORM, A TREE FROM MY NEIGHBOR’S YARD FELL
AND DESTROYED MY FENCE. DOES MY HOMEOWNERS POLICY PAY FOR THE
DAMAGE OR DOES MY NEIGHBOR’S POLICY?
Generally, your own policy should cover the loss. Your insurance
company may be able to recover the amount it pays you for the
loss and your deductible from the homeowners insurance that your
neighbor may have, in the event that the loss occurred as a result
of your neighbor’s negligence.
11. RECENT RAINSTORMS HAVE FLOODED AND DAMAGED MY BASEMENT.
IS THERE ANY COVERAGE UNDER MY HOMEOWNERS POLICY?
Flood coverage is generally excluded on the basic homeowners
policy. However, some homeowners policies provide coverage for
backup of sewers and drains that cause flooding in your basement.
This coverage can be purchased for a nominal premium. You should
check with your agent to see if this coverage is available and
how much it costs.
If, however, you live in a flood-prone area, you should consider
and may be required by your lending institution, to purchase
a flood insurance policy. Your agent should be able to inform
you about the Federal Flood Insurance Plan and the exclusions
and limitations of coverage in this policy.
12. THE FOOD IN MY FREEZER WENT BAD BECAUSE I LOST POWER IN
MY HOME. DOES MY HOMEOWNERS POLICY PROVIDE COVERAGE FOR THIS?
The basic homeowner policy usually does not. However, this is
a popular coverage for insurance companies to offer and you may
be able to buy it for a nominal additional premium. There is
also the issue of where the power was lost. Some policies are
limited to coverage for electricity lost in the home or where
the electricity enters the home. Others will limit it to within
so many yards from the home. Your agent should be able to tell
you about the availability of coverage and how much it would
cost.
13. INSURERS WILL NOT OFFER ME COVERAGE BECAUSE I HAVE A DOG
OF A PARTICULAR BREED. CAN THEY DO THIS?
Insurers may decide to non-renew your policy or decline offering
a policy as long as they do not base their decision on specific
criteria outlined in our insurance laws (M.G.L. Ch. 175, section
4C). The underwriting guidelines of homeowner insurers vary from
company to company and, as a result, insurers may view the liability
your dog and other risks on your property pose differently. Some
insurers may offer you coverage, but exclude liability coverage
for any claims resulting from dog bite incidents.
As a dog owner and homeowner there are ways that you can show
your insurance agent or prospective insurer that you've taken
steps
to mitigate any liability risk your dog may pose.
* Show the agent or prospective insurer that your dog has undergone
obedience training with a certified trainer.
* Show veterinary records that verify your dog has had all required
immunizations and whether it has been spayed or neutered.
* Show photographs as proof that your dog can be contained from
contact with visitors to your property (muzzle, dog run, fence,
or kennel).
* Ask a trusted neighbor or regular visitor to your property
to attest to the obedience of the dog in the presence of visitors.
* If your dog has bitten before, always disclose the nature of
the incident and the steps you took to prevent a repeat occurrence.
Remember, taking these steps does not guarantee that you will
receive coverage, but providing this information will be important
to the insurer in making an underwriting decision. To save you
time and frustration in your search for coverage, ask your agent
or insurer to be up front about the breeds of dogs the insurer
considers a high risk. Again, not every insurer views this issue
the same way.
If You Still Cannot Obtain Homeowners Insurance
The Massachusetts Property Insurance Underwriting Association
(a.k.a. the FAIR Plan) will offer homeowners insurance to consumers
who have been declined coverage in the voluntary insurance market.
However, the FAIR Plan will exclude liability coverage for claims
resulting from any dog with a bite history, but not for specific
breeds. More information on obtaining homeowners insurance through
the FAIR Plan is available by calling (800) 392-6108.
This information was compiled to help consumers answer some
of the most frequently asked questions about homeowners insurance.
Additional questions or comments should be made to the Division
of Insurance.
Greylock Insurance Agency
Mon-Fri: 8:30 to 5:00
128 South Street, Pittsfield
(413) 443-5943
(888) 200-4445
