Whether you are a first-time NJ home buyer, or have many years of mortgage payments and house upkeep, a condo owner or an apartment dweller, your household is one of some 100 million in the USA. Chances are your home is your single most expensive budget item and for the home or condo owner your most valuable investment. NJ Homeowners insurance is a package policy that covers both property structures and personal possessions and liability.
Because it is comprehensive, your NJ homeowners insurance policy may include coverage you are not even aware of. If your laptop is stolen from a motel room while you are a hundred miles away from home, for example, you will of course want to notify the local police. You will also want to check with your insurance company, not your agent, about coverage for loss under your New Jersey homeowners policy. And if your house burns down leaving you homeless, your policy usually living expenses as well as reimbursement for damaged property.
Your NJ insurance company can explain your policy in detail. More than any other line of coverage, homeowners insurance is substantially standardized throughout the United States. The questions and answers in this guide are based on the most commonly purchased homeowners insurance policy (called HO3 in the industry) offering the broadest covered perils as well as best protection.
You may be interested in knowing that claims can consume a large
percentage of every premium dollar. The rest of that dollar goes to taxes,
marketing and administrative costs, dividends and profits. It is in your best
interests to be aware now of your protection so that you may select the
insurance that best meets your needs.
We are talking about, the term "homeowners insurance". Although, for renters and condo owners the coverage for personal property and liability is similar. The main difference, of course, is that you do not need to insure the building under those circumstances. Therefore, almost all the information should be of use to you whether you own our home or rent, live in an apartment building or complex, a condominium, or a single family home.
Index of NJ Homeowners Questions
Insurance, any kind, is your protection against uncertainties of financial loss. For most people, their home is their single most valuable possession and their biggest investment. Homeowners insurance protects your investment as well as you, the members of your family and your household possessions.
If you were to suddenly lose your home due to fire or a tornado or have the contents damaged or stolen, like most of us, you probably could not afford to replace everything all at once. And if somebody sued you for an injury or damage caused by you or your property, the cost of defending that suit could run into tens of thousands of dollars just for legal fees.
All of these situations are covered by the homeowners package policy. And while it may be painful to think about fire, theft, and other "occurrences of life," let's face it, things happen.
Yet another reason you need to carry NJ homeowners insurance
is that home mortgage lenders require it. No mortgage company will lend the
large amounts of money needed to finance homes at today's prices without
requiring an insurance policy to protect their investment.
You do - it is your home and your homeowners insurance policy. As a means of protecting their investment, the mortgage lender company collects a set amount from you each month, puts it in a escrow account, and then pays your insurance and taxes when they are due. However, the policy is still yours and you may select the insurance.
"Exact" coverage is hard to define because there are different policies from various insurance companies writing most of the property insurance policies in NJ. However, 80 percent of homeowners policies are based on a standard form. All homeowners policies cover two important areas: property and liability. Remember that you have to have protection against the break-in and the stranger or neighbors child who slips on your property.
What this means in insurance terms is that your homeowners policy
has two basic components. It covers your structures and possessions
property insurance and it furnishes protection against personal
liability. Personal liability, as its name implies, means you are
legally obligated to pay money to another person for actions caused by you, your
family, or your property. That liability extends to medical payments to others
for injuries caused by you or your family.
NJ Homeowners policies vary but homeowners insurance usually covers damage to both structures and personal property caused by:
In fact, your coverage is likely even more comprehensive than the
above list. Many NJ homeowners policies cover damage by "just about everything,"
unless the coverage is specifically excluded. In these cases, it is even more
important to understand what is not covered.
Most catastrophes are covered; for example, wind damage from hurricanes and tornadoes come under the windstorm peril. Floods and earthquake damage, however, are not covered by a NJ Standard Homeowners insurance policy.
You may want to check with your agent about special catastrophic
policies for normally excluded conditions like floods and earthquakes. Of
course, the cost of such extra coverage may reflect the high risk involved. If
you live along New Jersey Beach or Shore, for example, expect to pay a much
higher premium for flood coverage than someone living further inland.
There may be other exclusions spelled out in your policy such as neglect, intentional loss, earth movement, general power failure and even damage caused by war. If you neglect to take care of your property (e.g., a leaky roof), you may not be covered. Obviously, if you intend to lose an object or damage your property, there is no coverage.
One other exclusion that can be costly is the Ordinance or Law exclusion. Building codes established by governmental bodies that drive up the cost of rebuilding or repairing after a loss occurs may not be covered by your insurance policy. Thus, if you discover when replacing damaged property that current law demands higher grade or more expensive materials than the original ones being replaced, the new materials may not be covered for the full price.
For example, if the current building code in your area requires a higher grade of electrical wiring and after a fire you are replacing all the wiring in your home, your policy may cover only the cost of replacing the older wiring.
Even if you live in a new house, laws and building codes are
constantly being updated. Coverage to include ordinance or law requirements can
be added to your homeowners policy with an endorsement - an addition that could
save you money in the long run.
Yes, they are both your property so they are both covered. The value of the real property - your home, garage, shed and other structures - is generally based on the value of the main structure, the house itself. Thus, if the house were insured for $225,000, the shed, detached garage and other auxiliary structures would be covered for 10 percent or $22,500 worth of damages. Additional property protection features may include living expenses should your home not be livable for a period of time.
Your personal property is also covered by a NJ homeowners
insurance policy. Personal property includes the contents of your home and
personal belongings used, owned, worn, or carried by you or members of your
household. This coverage is also based on the house coverage limits, and there
are limits on the losses that can be claimed. Higher limits can be purchased for
both real and personal property at a higher cost.
State laws may dictate how losses are to be figured, which means the same insurance company may use one method in one state and a different method in another. The common methods are:
Actual Cash Value - The replacement cost of the item minus depreciation. For example, a new computer may cost $1,500. If your 2 year old desktop computer set gets damaged in a fire, it might have depreciated 50 percent. Therefore, you would be paid $750 for it.
Replacement Coverage - The cost of replacing an
item without deducting for depreciation. So today's cost for a computer with
features similar to the old one damaged by fire would determine the amount of
compensation. If it still costs $1,500 today, that would be the replacement
Replacement value should not be confused with market value. The market value is what your house, for example, would actually sell for and is generally more than the replacement cost. This is because replacement value does not include the land - which almost always does not need to be replaced.
Check your policy. If you prefer replacement coverage and do not
already have it, this coverage can be added to your policy. Typically, the
difference in premiums is 10 to 15 percent to upgrade from actual cash value
coverage to replacement coverage. However, it is well worth it to protect your
investment in your possessions.
Remember that NJ homeowners insurance is designed to cover general personal possessions, not valuable collections like antiques, jewelry or original art. Insurance companies deliberately limit their coverage of expensive possessions so that household premiums are more affordable to everyone. After all, if they had to cover museum-level art collectors under standard homeowners policies, we would all end up paying higher premiums to cover those expensive items.
Your NJ policy lists the specific monetary limits for personal property under what is called "Special Limits." Those limits usually are:
If these limits seem low to you, you may wish to talk to your
agent about additional coverage for specific items.
Yes, perhaps in this case the term "homeowners" is misleading because this is a package of insurance coverage that extends to all your possessions no matter where they are. If you take a round-the-world vacation and lose a valuable item, as long as the loss is by a covered event or peril, the location does not matter.
The liability component also extends well beyond the boundaries of your home. Should you be found legally at fault for injury or loss to another individual, whether you unfortunately caused a tumble down a San Francisco hill or a fall in an Indiana barn, that is personal liability which again is addressed in your homeowners policy.
As in the property section of your NJ homeowners policy, there are
limits and exclusions to personal liability. Your business activities, for
example, are usually not covered under a homeowners policy. You are also not
covered for injuries or damage you purposely cause. Your policy lists specific
exclusions and limits.
No. Your property and the structure (the basement) are
covered by your policy as is your personal liability. However, the tenants'
possessions and liability are not covered by your policy. Therefore, they may
wish to purchase their own renters insurance. Whether you are a lessor or a
renter, you should check with your agent to make sure you have the right
As a member of the family, she is probably covered under
your homeowners policy. So too is your child away at college covered for
personal liability or theft or damage to his or her property even in the
dormitory or college apartment.
Insurance companies can operate in more than one state so the company that carries your primary residence may issue a policy for your vacation home. Personal liability is covered in the first homeowners policy so the second policy need cover only property. This type of policy is called a "dwelling policy."
If you rent out your second home for all or part of the year, your
NJ homeowners policy may need to be endorsed to cover the increased liability
exposure. The renter's personal property is not covered under your dwelling
policy. Should damage occur while someone is renting your property, they will
need to check with their own agent about their coverage.
Yes, but within certain limits. Both are covered as personal property used for business purposes. However, like all personal property, there are monetary limits on reimbursement. Whether your home business is your primary occupation or a hobby that nets you a few hundred dollars a year, it is still a business and you should treat it as such.
It's true - if most of us suddenly found ourselves without anything due to some calamity, we would be hard pressed to know all that we had lost. When was the last time, for example, that you counted the number of shoes you own or CDs, not to even mention furniture, dishes, drapes, or audio and video equipment? And the list goes on and on. How much is it all worth and where would you start if you had to replace it?
Now is the time to make a list of major household items and possessions. The handy inventory form at the back of this guide will make your job easier. Just remember that, where possible, it is wise to list the serial number, date and cost of purchase, and even include the receipt if you can.
Another easy way to inventory your home is to use a video camera or take pictures of your home and its contents. As you take the video, you can also talk about the items and their date and cost of purchase.
Whichever method you choose, have a copy made and ask a friend or
family member to hold on to it. Or store your copy in a safe deposit box. You
could even check with your agent - he or she may be able to store a copy for
you. That way if the worst happens and your home is destroyed, the inventory
list will be safe at another location.
The insurance company has to weigh many factors in determining a premium to charge for your policy. One factor is access to water as well as the dependability and distance of your local fire company and police. Rural homes more than five miles from a water supply are more at risk for severe damage from fire and lightning. Therefore, they can be more expensive to insure and NJ rural homeowners may even have difficulty obtaining insurance.
Other factors are, of course, the age and construction of your house. Generally, brick and stone homes are cheaper to insure than ones constructed of wood.
Because your premium is based partly on the level of risk the insurance company must take, there are things you can do to lower your premium. Installing deadbolt locks (to discourage theft), fire extinguishers, smoke alarms, and burglar and fire alarms that alert your local police and fire stations can often save you up to 15 percent on your premium. Check with your insurance company before purchasing any of these items to see if your insurance carrier has specific requirements to qualify for the discount.
Many NJ insurers also offer discounts if you insure both your home and automobile with the same company. Another way to save may be to increase the deductible on your homeowners policy. If your deductible is $100, it means that you agree to pay this amount first, and your insurance company will pay for damages that exceed this deductible. By increasing your deductible from $100 to $250, or even $500, this decreases the insurance company's risk, which may mean a savings in your premium.
Also, it pays to shop around for insurance coverage just like
anything else. Of course, you may want to keep in mind that the extent of
coverage also determines the premium cost so the cheapest policy is not
necessarily the best.
Insurance is one of the most heavily regulated industries. Every state has some sort of department, administration or agency that regulates and monitors every insurer operating within the state's borders. In addition to approving rates, your state's insurance department is involved in all insurance matters on behalf of private citizens and businesses. It also issues operating licenses to insurers and agents, based on their ability to meet the state's requirements for conduct and knowledge about insurance issues.
Contact your insurance company as soon as possible. If there is damage to your home or possessions, make "emergency" repairs to protect yourself and your property from further damage, then call your agent. For example, if some of the windows in your home have been blown out by wind, you may board them up to prevent additional damage. In fact, your policy covers the cost of these emergency measures.
However, before setting about to make permanent repairs, call your insurance company. The insurance company has the right to inspect the property in its damaged condition. They may want to send a claims adjuster or instruct you to get an estimate from an independent contractor.
If you have property stolen, notify the local police immediately
and call your insurance company.
Liability covers bodily injury and property damage to others due
to your negligence. The coverage applies to non-auto accidents that occur either
at your residence or off the premises. Medical expense payments such as first
aid can also be due to the injured party. Should you be sued or suspect that you
may be, contact your insurance company immediately.
The same rule of thumb applies to renters as to homeowners. If catastrophe struck tomorrow, could you afford to replace everything you own? Or if you were sued, would you have enough money to pay legal fees and possibly settle the suit? If not, chances are you would benefit from the protection that renters insurance brings.
Renters insurance offers the same general personal property
coverage and liability protection as a homeowners policy. Thus, your pocketbook
is insured while you are on vacation, and you are covered if your exercise
machine crashes into the apartment lobby wall and leaves a ugly hole. In fact,
most policies are surprisingly extensive and may include additional living
expenses if you are forced by fire or other damage to live elsewhere.
No, the landlord's insurance covers damage to the building and the
landlord's property not your personal property or liability. Plus, you
may be liable for damage to the building if it is your fault. If you go out and
leave a candle burning and a fire causes extensive damage to the entire
building, you may be held liable to the landlord.
Renters insurance is surprisingly inexpensive. That's
because you are not insuring a building. Like all property/casualty policies,
the value of your property to be insured and other risk factors are weighed by
the insurance company to determine your premium. Your insurance company can help
you find the best combination of coverage and cost.
NJ Condo owners insurance covers the same general areas outlined throughout this guide for homeowners in the important areas of personal property and liability. In addition, condo owners insurance provides coverage for some situations specific to condominium unit owners.
Usually, the condominium association buys insurance to cover the property (building and structures) and liability coverage for the general association. If you own a condominium unit, you may be responsible for covering from the "walls in" on your unit, that is, for your personal property and the interior of your unit whatever area is excluded from the condo association's policy, as well as for your personal liability.
Sometimes, condo owners are assessed by their condo
association for losses "outside the walls" that were not completely covered by
the association's policy. For example, if the clubhouse is destroyed and the
condo association did not have it insured, you could be assessed for a "share"
amount needed to replace it. If you wish, check with your agent about adding
such "loss assessment coverage" to your condo owners policy.