NC Home/Renters/Condo Insurance Information

NC Homeowners, Renters, Personal Property Insurance Information
The following information is provided so that NC consumers can make more informed choices when purchasing homeowners or renters insurance.  For most people, the purchase of a home is the largest investment they will ever make.  Protecting that investment from fire and other perils is extremely important.   Please note, homeowners insurance policies do not provide protection against losses from floods, earthquakes, mudslides, mud-flows or landslides. 

If you do not own a home, you may want to consider renter’s insurance. Having all your personal possessions destroyed in a fire without insurance is a tragedy that just does not have to happen.  Whatever your living arrangement – single-family home, condominium, apartment or mobile home – We have insurance coverage available to meet your specific needs. 

A homeowners insurance policy is a multi- peril policy, which means it combines property and casualty/liability coverage's in the same policy.  A multi-peril policy offers numerous advantages to consumers as it conveniently packages a range of coverages under one policy and is normally cheaper than if all the coverages were purchased individually. 

Homeowners insurance is sold as a personal package policy designed to cover a broad spectrum of perils associated with owning or renting a home. A peril is an event that causes damage to property; two examples are fire and theft.  Although insurance on your home is not required by North Carolina law, if your home is mortgaged your lender may require the purchase of insurance on your home.
Additionally, if you are a renter your landlord may suggest that you purchase insurance to cover your personal property. 

Homeowners insurance also protects you against liability for accidents that injure other people or damage their property.  The policy covers medical expenses for persons accidentally injured on your property.  The policy does not protect you against losses from floods, earthquakes, mudslides, mudflows or landslides. 

The homeowners policy contains two sections:

Section I provides property coverages (A, B, C and D) while Section II provides liability coverages (E and F).  A brief description of the individual coverages are as follows: 

Coverage A – Dwelling 
Coverage B – Other Structures 
Coverage C – Personal Property 
Coverage D – Loss of Use Coverage 
E – Personal Liability Coverage 
F – Medical Payments to Others 


COVERAGE A – DWELLING 
Coverage A provides major property coverage that protects your house and attached structures if it is damaged by certain events. It also covers fixtures in the house such as plumbing, heating, and permanently installed air-conditioning systems, electrical wiring and supplies on or adjacent to the residence premises for use in the construction, alteration, or repair of the dwelling or other structures. The amount of Coverage A is normally established by the market value, purchase price or other identifiers associated with establishing the value of the dwelling. You should always carry an amount of insurance equal to a minimum 80 percent of the full replacement cost of the dwelling.  

*Replacement cost is the amount it would take to replace or rebuild your home or repair damages with materials of similar kind and quality, without deducting for depreciation. Language in the policy contract states that there is a reduction in the amount payable for a loss if Coverage A is not a minimum of 80 percent of the full replacement cost of the dwelling.

COVERAGE B – OTHER STRUCTURES 
This coverage provides protection to other structures on the residence premises that are not attached to the dwelling. Items covered include detached garages, tool sheds, etc. Coverage B is normally limited to 10 percent of the Coverage A limit. However, you may purchase more coverage for an additional premium. You should always carry an amount of insurance equal to a minimum 80 percent of the full replacement cost of the other structures. Language in the policy contract states that there is a reduction in the amount payable for a loss if Coverage B is not a minimum of 80 percent of the full replacement cost of the other structures.

COVERAGE C – PERSONAL PROPERTY 
This coverage provides protection for the contents of your home and other personal belongings owned by you or family members who live with you. Coverage C is normally 50 percent of Coverage A (if coverage is also provided for the dwelling under the policy) or is subject to an established amount agreed upon by you and the insurance company. Coverage is limited on certain types of property that are especially susceptible to loss, such as cash, securities, jewelry, furs, manuscripts and stamp or coin collections. Additional amounts of insurance may be purchased. You may want to consider scheduling these items separately. 

COVERAGE D – LOSS OF USE 
This coverage will help with additional living expenses if your home is damaged by a peril insured against to the extent that you cannot live in your home. These expenses include, but are not limited to, housing, meals and warehouse storage. It is important to note that your company will only pay those additional expenses above and beyond your normal and customary living expenses. Coverage D is normally limited to 20 percent of Coverage A. You must keep receipts for all additional living expenses and submit them to your company for reimbursement consideration. All of the exclusions, conditions and specific language can be found in your policy. 

COVERAGE E – PERSONAL LIABILITY 
This section of the homeowners policy will provide coverage in the event you or a resident of your household are legally responsible for injury to others. Coverage E will provide a defense and will pay damages, as the insurance company deems appropriate. There are some exceptions. The liability coverage will not protect you in all situations, such as an intentional act. All of the exclusions and specific language can be found in your policy. 

COVERAGE F – MEDICAL PAYMENTS TO OTHERS 
This coverage pays for reasonable medical expenses for persons accidentally injured on your property. For example, if a neighbor’s child is injured while playing in your home, the medical payments portion of your homeowners policy may pay for necessary medical expenses. The medical payments portion of your homeowners policy may also pay if you are involved in the injury of another person away from your home in some limited circumstances. Medical payments coverage does not apply to your injuries or injuries of those that reside in your household. It is not a substitute for health insurance. Business activities are also excluded. All of the exclusions and specific language can be found in your policy. 

Whether you own or rent, there are different packages of home and renters insurance offered to protect your home and belongings. Each package protects against a specified number of perils such as fire, windstorm and theft. In addition to coverage for named perils, each package policy usually contains coverage for property damage, additional living expenses, personal liability and medical payments. Homeowners policies apply to most owner-occupied single family dwellings and is modified slightly for apartments and condominiums. 

The homeowners market in North Carolina primarily references six types of homeowners policies. Four of the six are normally purchased to handle single family dwellings while the remaining two are normally purchased for coverage on an apartment or condominium. 

Homeowners policies also provide some additional coverages which are described in your policy, including: 

-DEBRIS REMOVAL This additional coverage pays to remove debris of covered property, if the cause of loss is covered by your policy. It also pays up to $500 for the removal of trees felled by a covered peril that either damage a covered structure, block a driveway or block a dwelling’s entryway/exit designed to assist a handicapped person. 
-TREES, PLANTS, SHRUBS Trees, plants and shrubs on the residence premises are covered for up to 5 percent of the insurance on the house, but no more than $500 per item. Perils insured against are fire or lightning, explosion, riot or civil commotion, aircraft, vehicles not owned or operated by a resident of the “residence premises,” vandalism or malicious mischief or theft. 
-CREDIT CARD COVERAGE Most homeowners policies will pay up to $500 to cover unauthorized credit card use. 
-FUNGI, WET OR DRY ROT, BACTERIA This coverage will pay up to a total of $5,000 for the direct physical loss to property covered because of fungi, wet or dry rot, or bacteria. This amount is the most payable regardless of the number of locations insured or the number of claims made. Read your policy for other additional coverages and limitations. 

OPTIONAL COVERAGES YOU MAY WANT TO CONSIDER 

In addition to the basic coverages offered in the homeowners policies, you can buy other coverage's by adding endorsements to your existing policy. An endorsement is a change added to an insurance policy which modifies the original terms. Some examples of the most common endorsements follows: 

-GUARANTEED REPLACEMENT COST COVERAGE- Guaranteed Replacement Cost coverage is the most complete coverage for your home. If your policy contains this endorsement and the Coverage A limit stated in your policy is not enough to cover the loss to your dwelling, the insurance company will pay the difference, subject to a specified maximum. Check with your insurance agent to determine if an additional premium is required and what exclusions or conditions may apply. 

-INFLATION GUARD ENDORSEMENT- This endorsement attempts to keep the dollar amount of coverage on your policy current with the replacement value of your dwelling because of inflation. Even if you have this coverage on your policy, you should check your policy limits periodically to make sure you are adequately, but not excessively, insured. Check with your agent or company to see if your company offers this endorsement, if you are interested in purchasing it. 

-PERSONAL PROPERTY REPLACEMENT COST- This endorsement extends replacement cost coverage to your personal property, with certain exceptions listed in your policy. 

-REFRIGERATED PROPERTY COVERAGE- This endorsement covers property stored in refrigerators and freezers on the residence premises, to a maximum amount of $500. A special deductible applies to this coverage. The insurer will pay only the amount that exceeds $100 of covered losses. Perils covered are interruption of electrical service and mechanical failure. 

-PERSONAL PROPERTY ENDORSEMENT- This endorsement is sometimes called a “personal article floater.” It covers possessions of high value that are more mobile than most household goods. Some examples are jewelry, furs, coins, guns and computers. 

-WATER BACKUP AND SUMP OVERFLOW- Losses from water backup and sump overflow are not covered under your homeowners insurance policy. This coverage is available through most insurance companies as an endorsement, but it may not be offered to you when purchasing homeowners insurance coverage if you do not ask for it. 

-WATERCRAFT ENDORSEMENT This endorsement extends personal liability and medical payments coverage to others while operating certain watercraft. Physical damage coverage is also available through a separate endorsement. Consult your agent or insurance company to determine adequate coverage. 

 -Other additional coverages are also available to customize your policy to your specific needs. 


FACTORS THAT AFFECT YOUR INSURANCE PREMIUM:
There are several factors that can affect the cost of your homeowners insurance premium. Some of these factors are: type of construction, age of home, location, deductible, dollar amount of coverage, additional endorsements selected and underwriting guidelines.  Having protective devices such as dead bolt locks, fire extinguishers, burglar, smoke and fire alarm systems will help reduce your insurance premium. 

TYPE OF CONSTRUCTION- Your home’s ability to withstand or minimize loss due to fire and other perils may have an impact on your insurance premium. Frame houses usually cost more to insure than brick houses. 

AGE OF HOME- New homes may qualify for discounts with some insurers. These discounts result in a lower insurance premium. Additionally, some companies may not insure very old homes or offer a limited form of coverage. 

LOCATION- The location of your dwelling affects your insurance premium. Urban areas tend to experience higher crime rates and rural areas typically have less resources for fire protection. Some areas are more susceptible to specific perils, such as windstorm, earthquakes and mine subsidence. The distance of your home from a fire hydrant and the quality of your local fire department determine your fire protection class. Since fire and smoke damage cause millions of dollars in losses each year, the fire-fighting capability of a community such as water supply, building codes, your fire department’s equipment and the quality of your local fire department is taken into account in determining the insurance rate. Your city is assigned a fire protection class and it is used by insurance companies to rate policies. Normally these protection classes range from 1 to 10 with Class 1 having the lowest insurance rates and Class 10 the highest. Classification depends on the: size and the physical characteristics of the municipality or governmental entity; size of the fire department and its personnel, training and equipment; available water supply and pressure; and other recognized fire rating standards. 

DEDUCTIBLES AND THE AMOUNT OF COVERAGE- All homeowners policies carry a deductible which applies to most property losses. A deductible is the amount you must pay per claim or accident before the insurance company will begin paying. The deductible does not apply to liability coverages (Coverages E and F). Deductibles are fixed amounts specified in the policy. You may have the option of selecting among various deductibles. higher deductibles lower your insurance premium. You may also select a deductible higher than the standard $250 deductible; this will result in a lower insurance premium. Consult your agent for additional details. 

DOLLAR AMOUNT OF COVERAGE- The amount of coverage you buy for your house, contents and personal liability will affect the price you pay. 

ENDORSEMENTS- Additional coverage may be purchased under your homeowners policy by endorsing the policy. Typical endorsements provide coverage for replacement cost coverage on the dwelling and contents, inflation guard protection, etc. Endorsements such as these normally cause an increase in the insurance premium. Some endorsements are added to the policy to evidence the presence of certain features in the dwelling. Normally these features pertain to protective devices such as burglar alarms, smoke detectors, etc. Endorsements in this category normally entitle the policy to a credit which causes a decrease in the insurance premium. 


UNDERWRITING GUIDELINES
Underwriting guidelines are rules insurance companies use to decide whether to insure your property. Each company has its own underwriting guidelines. These guidelines may include information regarding you and the physical condition of your house including its upkeep and maintenance. 

Applications for property insurance may additionally request personal information such as where you work. As part of the underwriting process, insurance companies consider the severity and frequency of past claims on the home. Your agent and insurer will need to know what caused past claims in order to determine whether or not the same type of claim is likely to occur again.  Frequent claims caused by factors beyond your control, such as wind and hail, can also pose a problem.  If there have been frequent and/or severe claims, the insurance company may ask that you carry a higher deductible, or possibly refuse to provide coverage. 

Ultimately, your total premium will depend on various factors including:
-Type of construction
-Policy coverage limits
-Policy endorsements
-Policy discounts offered by your insurance company
- Claims History
- Insurance Score

INSURANCE TIPS FOR HOMEOWNERS/RENTERS:




INVENTORY YOUR BELONGINGS:
Make a list of your belongings and be sure to include purchase receipts (the best documentation), especially of large items like refrigerators and stereos, showing the year purchased and amount paid. Photographs and videotapes of your possessions are also a good idea. Preparing an inventory accomplishes two important things. First, it will make the process of filing a claim more orderly and less stressful, should you have a loss someday. 

Second, it can help you determine whether some of your more valuable possessions require more coverage than your present policy limits provide. Just make sure you keep a copy of your disk, tape, written list or photos in a separate location such as with a relative, in a safe deposit box or in your desk at work. Update your list on a regular basis and keep records of any new purchases or remodeling. These records will be very important if you ever need to file an insurance claim. 


DISCOUNTS/DEVIATIONS/CREDITS:
You may want to ask your agent or insurance company if you are eligible for any discounts. Following are some examples for which discounts may be offered. Your dwelling has a burglar alarm system, Your dwelling has dead bolt locks,Your dwelling is new, You have insurance on your home and automobile with the same company


READ YOUR POLICY:
Read your policy and make sure that it lists all coverages you have requested.  Know exactly what your policy covers and does not cover. 

KNOW YOUR INSURANCE COMPANY:
Know the name of the insurance company with whom your policy is written. The name of your company can be different from that of your agent or agency. This information is found on your policy


FAQ's:
 
- I’ve heard the term “dwelling policy.” What is the difference between a dwelling policy and a homeowners policy? A dwelling policy provides more limited property coverage than a homeowners policy. The dwelling policy provides property coverage. The homeowners policy offers a combination of property and liability coverages. Dwelling policies may be used to insure homes that do not qualify for homeowners insurance. 

- What are the different parts of a homeowners insurance policy? The Declarations – Almost always on the first page of your policy, this part contains such information as the name of the insured, the address, the dollar amount of coverage provided, a description of the policy and the cost of the policy. The Definitions – This section explains, as precisely as possible, the meaning intended for terms used in the policy. These definitions are key to understanding the extent of coverage your policy provides. Coverages – Explains the extent of property and liability coverage. Be sure to check the standard exclusions. Exclusions – This section details what is not covered by your policy, under both property and liability sections. Conditions – The insurance policy is a type of contract. This section explains the obligations of the insured and the insurer (insurance company) under the policy, for both property and liability. It explains your duties in the event of a loss, and some details about how the company will settle these losses. 

- Endorsements – An amendment to your policy that adds, removes or otherwise changes the standard coverage you have under your policy is called an endorsement. Through your agent many kinds of endorsements can be attached, and thus tailor a policy to any special needs you may have. An insurance company could use an endorsement to limit your coverage. Therefore, it is particularly important to read the endorsement section of your policy. When does coverage begin? To obtain a policy you must fill out an application. The application contains information to help the company decide whether to accept or reject the risk your application poses. The agent or insurance company may issue you a binder, which is a statement that you have immediate protection for a specified time. The binder guarantees temporary coverage only, during which time the company decides whether or not to issue you a policy. At the end of the binder period, if the company accepts your application, you will be issued a policy. The policy period is usually for one year. If the company decides not to issue a policy, you will be covered for the time period specified in the binder. If the binder period is about to expire and you have not heard from the company, it is best to inquire about the status. 

- I’m planning to purchase an older home, built in the 1800s. Is there a policy available for older homes? Yes, the basic policy for older homes, HO 00 08, covers the home and your personal property. Many older homes, especially those with historical significance or with unique architectural aspects, would cost more to replace than the home’s market value. Some building materials used in the 1800s are no longer available today. Others would be so expensive that it would be nearly impossible to return your home to its former condition. If you are interested in getting a rate for your policy to cover actual replacement cost, contact your agent. 

- Who should I hire to make repairs? Deal only with reputable and insured contractors. Check the track record of anyone you are thinking of hiring and ask those you trust for recommendations. Call the Better Business Bureau to see if there are any complaints on file against the contractor or company. Remember to have a certificate of coverage sent to you by the contractor’s insurance company. 

- I have a collection of valuable art. What precautions should I take to be sure I’m covered if I have a loss?  Be sure your agent knows about any valuable items you own when you purchase your policy. Keep documentation of the worth of these items in a safe location. Be sure you understand the limits and exclusions of your policy or any rider. If you have particularly valuable items or ones where the value might be disputed, you might consider hiring a reputable appraiser. 

- If my roof is damaged, does the company have to replace my whole roof? No, they only have to replace the damaged area, even if the shingles will not match (e.g. the original shingles are now discontinued). 

- A tree fell in my yard during a windstorm. My agent said my policy does not cover the cost of removing the tree. Why? The homeowners policy will pay reasonable expense, up to $500 for any one loss, for the removal of trees from your premises provided the tree(s) damages a covered structure. 

- If someone else is injured on my property, does my homeowners liability coverage cover the cost of his or her injuries?  Only if you are negligent, causing the injuries.  If you are not negligent, then coverage is available under the Medical Payments to Others coverage provision in the policy. This would cover only incurred medical expenses up to a limited dollar amount. It would not cover payment for pain and suffering, lost time, etc. 

- How does depreciation apply under a homeowners policy? Depreciation applies when the loss to carpet, furniture and other items listed in the loss settlement conditions are covered under the actual cash value provisions of the policy. As a general rule, actual cash value is the replacement cost of the item, less depreciation. Thus using a television loss as an example, if the useful life of the TV is 10 years and it is five years old the depreciation would be one-half. 

- If my house is destroyed, do I have to rebuild within a certain period of time? You may disregard the replacement cost loss settlement provisions and make claim under your policy for loss or damage to buildings on an actual cash value basis. You may then make claim within 180 days after loss for any additional reimbursement according to the Loss Settlement Provisions in your homeowners contract. 

- My policy has a limit for other buildings and structures, but I do not have a garage or shed. Am I paying for coverage I do not need?  The homeowners policy is a package policy designed to meet the needs of most homeowners. Although it may provide coverage that you do not need, it is less expensive for the company to issue a policy this way than to tailor it to each policyholder’s needs. The result is a policy that provides broader coverage at a lower price. 

- I submitted a claim for damage to my dwelling. I have replacement cost coverage, but my insurance company only paid part of the cost of repairs. Can they do that?  The homeowners policy provides replacement cost coverage for covered buildings without deduction for depreciation. There are different ways in which the company may pay replacement cost. Usually the insurer will make a partial payment until the property has been repaired. Once the property has been repaired, the insurer will pay the difference between the amount already paid and the actual cost to repair the building with similar construction, up to the policy limits.  If you elect not to repair the house, you can submit a claim for the actual cash value of the damaged home. 

- I recently submitted a claim for several items stolen from my home. The insurance company indicated it would not pay my claim unless I submit bills, receipts or related documents that will prove I owned these items and justify the values that I am claiming. Do they have the right not to pay unless I give the information?  Yes. The insurance company has the contractual right to request any information it feels is necessary to confirm ownership and value of the items claimed. The ultimate responsibility of proving the loss is yours. 

- How long does a company have to settle my claim? The company should acknowledge receipt of your claim within 30 days. There is no specific time limit in which the company must settle your claim since each claim is different and the length of time to settle may vary. 

-  I just received a non-renewal notice because of two claims I made over the past couple of years. Why has the company non-renewed my policy when these claims were not even my fault?  Insurance companies develop guidelines that help them determine if you qualify for their policy. These guidelines may vary from company to company. Although companies are concerned if a loss is the result of negligence, they also review and consider the size of the loss(es) and how often losses occur.