Homeowners
Why Homeowners Insurance is Crucial
If you have a mortgage, your lender likely requires homeowners insurance. Regardless, protecting your investment is essential. Whether you’re a first-time buyer, upgrading, or downsizing, the right policy keeps you protected.
What risks Do Homeowners Policies cover?
Homeowners insurance offers critical protection for your most valuable asset — your home. It helps cover damage from common risks such as fire, storms, vandalism, and theft. It also includes liability protection if someone suffers an injury on your property. If a covered loss forces you to move out, your policy can help pay temporary living expenses. This coverage is essential for maintaining peace of mind and meeting lender requirements.
- Loss of use/living expenses if you must relocate
- Covers dwelling, roof, and attached structures
- Protection for personal belongings
- Policies available for condo insurance as well
- Liability coverage for guest injuries
- Mortgage lenders often require it
Government resources for Homeowners Insurance in NY & NJ
For state-level guidance on homeowners insurance including coverage types, policy details, and regulatory insights, visit the New York State Department of Financial Services’ Homeowner and Tenant Insurance Guide. If you’re in New Jersey, read the Department of Banking and Insurance’s Consumer Guide: Insuring Your Home which walks you through how policies work, and other key considerations.
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FAQs
1.) Does homeowners insurance cover flood or earthquake damage?
No, standard homeowners insurance does not cover damage from floods or earthquakes. This is a common misunderstanding among homeowners. Homeowners must purchase separate flood insurance through either the National Flood Insurance Program (NFIP) or a private flood insurance carrier, especially for those living in FEMA-designated flood zones. Standard policies exclude earthquake coverage. You must add it via an endorsement or separate policy if you want it. Homeowners in coastal communities or low-lying areas should consider flood insurance, even if they’re not technically required to carry it.
2.) How much homeowners insurance coverage do I need?
Coverage depends on factors like your home’s replacement cost, the value of your belongings, and your liability exposure. Replacement cost is not the same as market value. It refers to how much it would cost to rebuild your home using similar materials and labor. In high-cost areas (e.g., Hamptons, Bergen County, etc.), rebuilding and materials can cost significantly more. It’s essential to periodically review and update your coverage limits to reflect current construction costs, especially with inflation affecting labor and materials
3.) What factors affect homeowners insurance premiums in NY and NJ?
Many factors influence your homeowners insurance premium including your home's location, construction type, age, and size. Insurers also consider the proximity to fire stations, the presence of protective devices like burglar alarms or sprinkler systems, and your personal claims history. In parts of New York City and northern New Jersey, for example, premiums can be higher due to increased theft rates, population density, and severe weather risks. Many insurers also use credit scores as a rating factor in both states. Maintaining good credit can help keep premiums lower.
4.) Does homeowners insurance cover my home-based business?
Standard homeowners insurance policies typically exclude or limit coverage for business-related property and liability exposures. If you run a home-based business, such as bookkeeping, consulting, or even online retail, you may need to add an endorsement or obtain a separate business policy. Failing to secure proper coverage could leave you financially vulnerable. Insurers may deny commercial property or liability claims for unreported business activity conducted at home.
5.) What happens if someone is injured on my property?
If anyone such as a guest, delivery person, or contractor is injured on your property, the liability portion of your homeowners insurance policy can help cover their medical expenses, legal defense costs, and potential judgments. This includes slip-and-fall accidents, dog bites, or even injuries caused by poorly maintained walkways. In states like New York and New Jersey where medical and legal costs are high, having adequate liability limits is crucial to protecting your personal assets.
6.) How do I file a homeowners insurance claim?
If you suffer a covered loss, contact your insurance agent immediately to initiate the claims process. Document the damage with photos or video, save receipts for any emergency repairs, and keep a record of all communications. Your insurance company will assign an adjuster to assess damages and help determine a payout. It’s important to file promptly to avoid delays.
7.) Can my homeowners insurance policy be canceled or nonrenewed?
An insurer can cancel or decline to renew your policy for reasons like nonpayment, frequent claims, property condition, or changed risk. In New York and New Jersey, insurance regulators require carriers to provide advance notice before canceling or nonrenewing a policy. For nonrenewals, insurers generally must give at least 30–45 days’ notice, depending on the circumstances. Maintaining your home in good condition, paying your premiums on time, and working with a broker like Lanco that shops your coverage annually can help avoid surprises at renewal time.
8.) What is the difference between actual cash value and replacement cost coverage?
Actual cash value (ACV) coverage reimburses you for your property’s depreciated value after damage. Replacement cost (RC) coverage pays the full cost to replace the item with a new one of similar kind and quality, without factoring in depreciation. Most homeowners insurance policies offer RC coverage for the dwelling. If you're not sure which coverage is right for you, give us a call and we can advise.
9.) What does an HO-1 policy cover?
An HO-1 policy is a basic form of homeowners insurance that provides very limited coverage. It typically protects against only a handful of named perils such as fire, lightning, and vandalism. It protects neither personal liability nor personal property, and excludes many common risks like water damage or theft. Because of its minimal coverage, HO-1 policies are fairly uncommon.
10.) What does an HO-2 policy cover?
An HO-2 policy, also called a broad form policy, offers more protection than HO-1 but still only covers named perils. This includes coverage for risks like falling objects, the weight of ice or snow, accidental discharge or overflow of water from plumbing, and freezing of household systems. This policy covers both the structure and personal property, but only for the named perils listed. Some homeowners choose this policy as a middle-ground option to get basic protection without paying for the more comprehensive HO-3 coverage.
11.) What does an HO-3 policy cover?
The HO-3 policy, also known as a special form policy, is the most widely used type of homeowners insurance. It covers the structure on an open-perils basis, but can have specific exclusions listed. It covers personal property only for named perils and also includes liability coverage, loss of use, and protection for other structures like garages and fences. HO-3 policies are the standard choice for most homeowners because they strike a balance between affordability and comprehensive protection.
12.) What does an HO-4 policy cover?
An HO-4 policy is for tenants and is commonly referred to as renters insurance. It does not provide any coverage for the structure of the building since that responsibility falls to the landlord. Instead, HO-4 policies cover a tenant’s personal belongings against a list of named perils such as fire, theft, and water damage. It also includes personal liability and additional living expenses if the rented unit becomes uninhabitable.
13.) What does an HO-5 policy cover?
HO-5 policies offer the most comprehensive options out of all the different homeowners insurance forms. Unlike HO-3, which only cover personal property for named perils, an HO-5 policy covers both the structure and personal property on an open-perils basis. This means all risks are covered unless they are specifically excluded. HO-5 policies usually offer greater limits for high-value items like jewelry or electronics and fewer restrictions on claim settlements. While these policies are more expensive, they are ideal for homeowners with high-value belongings or those who want maximum protection.
14.) What does an HO-6 policy cover?
An HO-6 policy, also known as condo insurance, is built specifically for condominium owners. It covers the interior portion of the unit, including walls, flooring, fixtures, and personal property. The condo association’s master policy typically covers the building’s exterior and common areas. HO-6 also includes liability protection and coverage for improvements or alterations made to the unit by the unit owner. Condo owners choose HO-6 policies to protect their unit and any belongings they may have there.
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