There are several types of home/property insurance, depending both upon your living situation and your need for protection from loss/harm. They are detailed below:
1. Property Damage:
Property damage coverage helps pay for damage to your home and personal property.
Other structures such as tool sheds, detached garages, houses and their contents are also covered. You should check with your agent or your insurance company to determine if the amount of coverage on other structures is sufficient. Personal property is the contents of your home and other personal belongings owned by you or family members who live with you.
Home insurance policies may provide limited coverage for small boats; however, most
home insurance policies do not cover motorized vehicles unless they are unlicensed and used
only at your home. Your insurance agent or your insurance company can help you find
appropriate coverage for your car, boat, snowmobile or other recreational equipment.
Some forms of personal property, such as silverware, computers, guns, money, expensive
antiques and jewelry, have limited coverage under your homeowner's policy and may need
additional insurance. This coverage can be added to your policy as an endorsement.
You can choose to insure your home and belongings for either replacement cost or actual
cash value. These terms are explained below.
Replacement Cost or Actual Cash Value?
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.
Depreciation is the decrease in home or property value since the time it was built or purchased
because of age or wear and tear.
Many insurers require homeowners to insure their homes for at least 80 percent of the
replacement cost. If the homeowner fails to insure for at least 80 percent of the replacement cost,
a penalty is applied to partial losses. For example, if it would cost $125,000 to replace your
home and it is insured for $100,000 (80 percent of its replacement value), and a fire causes
$25,000 worth of damage, then your insurance company will pay the full $25,000.
On the other hand, if your $125,000 home is insured for $75,000 (which is less than 80
percent of its replacement value), and you suffer a $25,000 loss, your company would pay for only part of the loss. You would have to pay the balance out of pocket. Your company would
pay for damages based upon the following formula:
Amount of Insurance Carried $75,000 = 3/4 or 75%
Amount of Insurance Necessary $100,000
to cover assets (80 percent of $125,000)
Using these figures, your company will only pay for 75% of your $25,000 loss. Hence,
3/4 x $25,000 loss = $18,750 paid by the company. You would have to pay the balance of
Insuring your home for at least 80% of its replacement cost is very
important. Check with your agent or insurance company to see what is required. You may wish
to insure at 100 percent of replacement cost so you will have sufficient coverage in the event of a
Actual cash value is the amount it would take to repair or replace damage to your home
after depreciation. For example, if your roof has a 20year warranty and is 17 years old, there
would be a depreciation for the age and condition of the roof.
Most standard home insurance policies cover the contents of your home (i.e., personal
belongings) on an actual cash value basis. Many insurers offer an option for you to insure your
belongings at replacement cost. The premium will be slightly higher for this coverage; however,
you may want to consider this option.
Whether your home is insured for replacement value or actual cash value, it is important
to keep track of its value. For instance, the addition of a room, new insulation and yearly
inflation all increase the replacement cost of your home, while the actual cash value of the home
may decrease over time.
Additional Living Expenses
Most home insurance policies provide additional living expenses that will pay some
expenses if your home is damaged by an insured event to the extent that you cannot live there
while repairs are being made, or if you are denied access to your home by government order.
These expenses could include limited motel, restaurant and warehouse storage.
This coverage protects you against a claim or lawsuit resulting from bodily injury or
property damage (nonauto and nonbusiness) to others caused by your negligence. This
coverage applies to you and all family members who live with you. You should check with your
agent or insurance company to determine if the amount of personal liability coverage is
Regardless of who is at fault, this coverage pays medical expenses for persons
accidentally injured on your property by a member of your family or by your pets. Medical
payments do not apply to your injuries or those of family members living with you or to activities
involving your athome business. You should check with your agent or insurance company to
determine if the amount of medical payments coverage is sufficient.
An insurance form is another name for an insurance policy, and it specifies what perils
(such as fire, lightening, flood, etc.) your home and belongings are insured against. The
following are descriptions of the various insurance forms available for homeowners, renters and
condominium owners. Not all insurers use these exact terms to describe their home insurance
forms; however, the coverage provided will be similar.
The five homeowners package forms offered to owners of singlefamily owner occupied
homes are HO1, HO2, HO3 with HO15 and HO8. These policy forms insure your home and
belongings against at least 11 named perils. The more perils your policy covers, the more you
will pay for the policy. Please email the Nevada Department of Insurance to receive these forms.
The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.