Most homeowners in the United States have home insurance of some kind, but not everyone has a thorough understanding of what home insurance really is. You might have questions, like “does insurance cover mold?”, or “what’s a deductible?”
Don’t worry though—if you’ve ever wanted to find definitive answers to your home insurance questions, you’re in the right place. Below is our guide to home insurance, with lessons on everything from filing claims to dealing with natural disasters.
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Home insurance differs depending on what kind you purchase. In the United States, there are eight different types of homeowners insurance, which can be purchased depending on where you live and what kind of home you own.
The basic HO1 form covers 11 listed perils including fires, lightning, windstorms, and hail, but not floods or earthquakes. However, most states no longer offer this type of insurance. The more advanced HO2 covers 16 perils, but the more popular HO3 “special” form provides coverage for everything except specific exclusions.
In the case of mold, it actually depends less on the type of policy you have and more on what caused the mold to appear in the first place. Most homeowners insurance does cover water damage, but only to a certain extent. If the cost of fixing your mold problem is above $5000, it is less likely to be covered by your home insurance—and of course, mold caused by flooding is usually not covered.
According to consumers, the three most popular insurance companies in America are The Hartford, State Farm, and Chubb. The Hartford is well-regarded for their reliable claims processing and financial strength, while State Farm and Chubb enjoy a sterling reputation for their customer service.
The Hartford distinguishes itself by offering a policy that covers the complete rebuild of your home in the event that you suffer a “total loss”—defined as a situation in which the costs to rebuild the home surpass its value. In these cases, The Hartford can pay up to 125% of your coverage limits (or even 150%, depending on the area in which you live). Under their ProtectorPLUS Zero Deductible Benefit policy, you may also see as much as $5,000 of your deductible covered if your home has been severely damaged.
Chubb competes with this by offering to cover necessary upgrades resulting from changes in building codes, and the ability to offer a cash settlement to owners who do not want to rebuild. State Farm offers discounts for home alert protection systems and the use of certain protective roofing products.
Deductibles are the amounts you pay out of pocket before your insurance company pays for those losses that are covered. For example, if your covered claim was $5000 but you had a $1000 deductible, you would pay $1000 and your insurance company would cover the leftover $4000.
Each and every claim is different, which means it isn’t possible to know exactly how long your claim will take to process. However, there are a few ways to form a reasonable estimate.
The first thing you should do is examine the laws in your state. There is no federal law governing payout time frames, but different states require insurers to meet different deadlines. In states such as Kansas, Missouri, and California, it will take 10-30 days to acknowledge your claim and up to 45 to accept or deny it. However, the laws in other states are far more ambiguous, stating only that claims must be processed within “a reasonable timeframe”. The larger your claim is, the longer it is likely to take.
In most cases, communication is key. The more information you give the claims team at your insurance company, the faster they will be able to process your claim. Make sure that you have gathered plenty of evidence, and that you are forthcoming with the team handling your claim.
Some people worry that filing a claim will make their premiums (the amount they pay each period to remain insured) go up. Companies like Allstate offer discounted premiums to customers who are claim free, which vanish when a claim is filed. They may also include surcharges when claims are filed, or raise premiums for customers who have filed numerous claims.
The best way to avoid any issues with your home insurance is by reading the agreement for it carefully the moment you choose a policy.
Understanding your rights and responsibilities long before you ever have to file a claim means that you’ll be well-prepared if and when the need arises. Keep accurate records of exactly what your policy does and does not cover, know your terminology, and stay alert for any clauses that could cause your premiums to rise. If you do, you should find that home insurance becomes a relatively simple matter, and one that you can always approach with confidence.
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