After The Emergency...

Question #1:

Are you covered for direct losses due to fire, lightning, tornadoes, wind
storms, hail, explosions, smoke, vandalism and theft?

Answer:

Yes. The HO-3 provides broad coverage for a large number of perils, including
all those listed. There are some limits, however, on the amount of insurance
you have.

Question #2:

Your house is totally destroyed in a fire. You have bought $150,000 worth of
insurance to cover the structure of your house. Will this be enough to
rebuild your home?

Answer:

If the cost of rebuilding your home is equal to or less than $150,000 you
would have enough coverage. The HO-3 policy pays for structural damage on
a replacement cost basis. If the cost of replacing your home is, say,
$120,000, then that is all the insurance you need. On the other hand if the
cost of rebuilding your home is $180,000, then you will be short $30,000. If
you choose not to replace your home, you will receive the replacement cost
of your home, less depreciation. This is called actual cash value.

Question #3:

Are you covered for flood?

Answer:

Flood insurance is provided by the Federal government, under a program run
by the Federal Insurance Administration. If you are in a flood prone area
it may be wise to purchase flood insurance. In some parts of the country,
homes can be damaged or destroyed by mudslides. This risk is also covered
under flood policies. Contact your agent or company representative to get
this insurance, or call 1-800-427-4661.

Question #4:

A pipe bursts and water flows all over your floors. Are you covered?

Answer:

Yes. The HO-3 covers you for accidental discharge of water from a plumbing
system.

Question #5:

Water seeps into your basement from the ground. Are you covered?

Answer:

No. Water seepage is excluded under the HO-3. And if the water seepage is
not due to a flood you will not be covered under a flood policy. Problems
like seepage are viewed as maintenance issues and are not covered by
insurance.

Question #6:

Are you covered for earthquake damage?

Answer:

Earthquake coverage is sold as additional coverage to the homeowners
policy. To determine whether you should purchase this insurance, talk to your
agent or company representative. In earthquake prone areas, the price of this
insurance is relatively high. In other areas, it is relatively cheap.

Question #7

A neighbor slips on your sidewalk and threatens to take you to court for
damages. Does your policy protect you?

Answer:

Yes. The policy will pay for damages, if the accident is the result of
your negligence; they will also pay for the legal costs of defending you
against a claim. Also, the medical payments part of your homeowners policy
will cover medical expenses arising from an injury to a neighbor or guest.

Question #8:

During a storm, a tree falls and damages your roof. Are you covered?

Answer:

Yes. You are covered for the damage to your roof. You are also covered for
the removal of the tree, up to a $500 limit.

Question #9:

Your golf clubs are stolen from the trunk of your car. Can you recover?

Answer:

Yes. The HO-3 covers your personal property while it is anywhere in the
world. However, if your golf clubs are old, you will only get their
current value. This normally will not be enough to purchase a new set.

Question #10:

Your house is close to the ocean. You have heard that if your house is
destroyed by the wind, the town's new building code requires that you
rebuild the house on stilts. This will cost $30,000, in addition to the
cost of rebuilding your house. Are you covered for this extra cost?

Answer:

No. The HO-3 excludes costs caused by ordinance or laws regulating the
construction of buildings.

Action:
Purchase the Law and Ordinance endorsement. This will cover the extra
costs involved in meeting new building codes.

Question #11:

Am I covered for an Act of God?

Answer:

Yes. Normally, you are covered for Acts of God;. The term "Act
of God" usually refers to natural disasters like hurricanes and tornadoes, as
opposed to man-made acts, like thefts or auto accidents.  Most natural
disasters, with the notable exceptions of floods and earthquakes, are covered
under normal insurance.

Question #12

Does your policy provide less coverage than the HO-3?

Answer:

If the answer is yes, review your coverage with your agent. Some older
policies provide less coverage than the HO-3. They may not provide
coverage for water damage, theft, or liability. They may also provide
coverage for the house on an Actual Cash Value basis, rather than a
replacement cost basis. Actual Cash Value means replacement cost less
depreciation. For example, if your roof is destroyed in a storm, the
insurance will only pay the cost of a new roof less than amount of
depreciation of the old roof. If your roof was in great shape, this
deduction will not be large. However, if the roof was old and worn out,
the deduction for depreciation may be large.

Question #13:

Where do I get more information?

Answer:

Contact your agent or company representative. You may also call the
National Insurance Consumer Helpline at 1-800-942-4242, or visit their
web-site at www.iii.org.