Are college students covered on their parents’ Homeowner insurance policy?

The short answer is it depends. Based on the PA Insurance Service Office’s (ISO) homeowner insurance policy, an “insured” on a homeowner insurance policy includes a student enrolled in school who meet all the following:

1. Enrolled as a “full time” student defined by the school

2. Who was a resident of your household before moving out to attend school

3. Under the age of 24 and your relative

Thus, if a student is not enrolled full time or is over the age of 23 attending school, they would not have homeowner insurance coverage from their parents’ policy. The good news for families in this situation is that endorsement HO 05 27 “Student Living Away From the Residence Premises” may be used to extend coverage from the parents’ homeowner insurance for a student who is 24 or older.

What coverage do college students have?

If a student is an “insured” on the parents’ homeowner insurance policy they would have liability coverage for injury or damage caused to another person and coverage for their “stuff” – laptops, books, TVs, Ipods, ect. However, the standard ISO homeowner policy has a limitation of 10% for personal property located off the insured’s “residence premises”. This means if your homeowner insurance policy has $100,000 of personal property coverage, the student(s) at college would only have $10,000 of coverage for their “stuff”.

This may sound like more than enough coverage but $10,000 can go quickly depending whether you have multiple college students or just one student with some really nice “stuff”. Again there is an ISO endorsement to provide extra coverage if needed. It is HO 04 50 “Personal Property at Other Residences” endorsement and it allows you to purchase additional coverage above the 10 percent limitation found on most policies.

Caution that many insurance companies have their homeowner policy forms and their provision may be different than the standard ISO form. Always consult your insurance company to verify their specific requirements for definitions of “insured” and coverages.

Do college students need renters insurance?

Renters Insurance is always a good idea especially when a student lives off campus. As we mentioned in our prior blog post “The Truth About Renting and Insurance” it costs as little as $50 per year and it helps eliminates all the questions related to whether a college student is covered on a parents’ homeowner insurance policy.

Insurance coverage is an important but overlooked issue facing families and college students. Talk with your insurance agent and make sure your family has the appropriately coverage before your child has the car packed for college too.

Picture via LancasterOnline (Dan Marschka/Staff)

According to LancasterOnline, this most recent Lancaster, PA storm had winds up to 70 mph and may have caused nearly $2 million in damage. Much of the damage was caused by fallen trees and many people are filing home insurance claims to pay for the damage and clean up. However, a standard home insurance policy does have coverage limitations for damage caused by trees and for trees themselves. Make sure to understand these coverages and limitations before submitting a home insurance claim to avoid any surprises.

My neighbor’s tree fell on my house, whose insurance pays?

Generally, who owns the fallen tree is not the determining factor of whose insurance will respond. The person who submits the claim is actually the person who owns the home that was damaged by the fallen tree. So if your home or other covered property is damaged by anyone else’s tree, your home insurance policy will respond. Likewise, if your tree falls on anyone else’s home or other covered property, their home insurance will respond.

The only time a home insurance policy should be involved with damage to someone else’s property is if the tree owner was liable. This includes a homeowner neglecting a rotten or leaning tree that should have been removed or trimmed prior to the damage occurring.

Will my home insurance replace my damaged landscaping and trees?

Trees, shrubs and other plants (including lawns) are covered on a standard home insurance policy but only for losses due to fire, lightning, explosion, riot, non owned vehicles, vandalism and theft. On the surface, this sounds pretty good, but did you notice that wind or ice are not included. So if your 100 year oak tree fell over due to wind storm, the insurance company will not pay to replace it.

Will insurance pay to remove my tree?

The cost to remove a tree is only covered if the tree damaged a covered structure on the insurance policy, if it blocks a driveway or if it prohibits access to the home. However, most home insurance policies have $500 or $1000 limitation to remove trees if a loss is caused by wind, hail, weight of ice, snow or sleet.

If a tree falls into your yard and does not cause any damage or restrict access, there is generally no coverage to remove the tree. Tree removal coverage varies based on the insurance company and it is best to ask your agent what your specific coverage limits are for tree removal before submitting a claim.

If you have any other tree related home insurance questions, let us know by leaving a comment below.

What Does Renter Insurance Cover?

Coverage for your Personal Belongings

Whether the contents of your home – furniture, clothing and other items – are stolen or destroyed in an insured disaster, such as a fire, they are covered under this part of the policy. However, just like a homeowner insurance policy, most renters insurance policies have special limitations for certain types of property.

Buy the replacement cost option. This will help ensure you get what it costs to “replace” your belongings at claim time and it only costs a few extra dollars per year.

Liability Protection

When most people think of buying renters insurance they want to protect their belongings, but the most valuable part of a renters policy is the liability coverage. Liability protection covers you against claims or lawsuits for bodily injury or property damage that you or your family members negligently cause to other people or property. It also pays for injury or damage caused by pets.

So if your son, daughter or dog accidentally ruins your neighbor’s valuable rug, you’re covered. But if they destroy your rug, your liability coverage does not provide compensation.

Your policy also provides medical coverage up to a specified limit. In the event a friend or neighbor is injured in your home, he or she can submit the medical bills to your insurance company. Expenses are paid without the injured party filing a liability claim against you.

Coverage for Additional Living Expenses

If you lose the ability to live in your apartment because of a covered loss this coverage pays for additional living expenses you incur due to temporary relocation. Note that it does not pay for the total expense, just the expenses due to the vacating of your home.

How Much Does Renters Insurance Cost?

Renters insurance is one of the best insurance buys on the market. Most policies in the Lancaster, PA area range between $50-$250 per year depending on the amount of personal property and the deductible on the policy.

Sometimes renters insurance can even be free! When renters insurance is also placed with the same company as your auto insurance, you can get a new discount on your auto insurance that can completely offset the cost of the renter insurance.

Although renter’s insurance is usually not required, it is just as necessary to have. It is a great example of using the philosphy of getting a lot for a little.

Without proper documentation even a great insurance policy won’t get you an easy or, potentially, full claim settlement.  That is why it is important for homeowners and renters to maintain an updated home inventory.

Taking a Home Inventory

The easiest method to take a home inventory is by taking digital photographs or shooting a narrated video. If you don’t have any type of camera, just buy a $10 memory card and ask to borrow a friend’s digital camera. Make sure to open all cupboards and closets with the drawers open. Don’t forget storage areas, the garage and any detached structures like a shed.

For more expensive items like televisions and electronics, make sure to take close-ups of the model and serial number and keep sales receipts. Also take close-ups of any custom structural elements like built-ins, stone fireplaces or exposed woodwork. Remember that certain big ticket items have insurance limitations and they may need a separate policy.

The most important part of a home inventory is to store it online or a safe place outside the home. It completely defeats the purpose of a home inventory if the media that it is stored on gets burned in the fire too. KnowYourStuff.org is a great resource that offers a free online software that makes creating and keeping a home inventory easy. They also have a short video showing how to record a home inventory.

Having a major house fire or robbery is stressful enough. Take 30 minutes to create a home inventory and make sure you have adequate proof prior to a major claim.

It’s summer time and that means your summer vacation is finally here! However, a vacation also means your home will be empty for a period of time and it can become a target for a burglary. That is why, as you plan for the final details for your trip, you need to take time to plan for what’s going to be left behind, your home. According to the Insurance Information Institute, nine out of 10 home break-ins could be prevented. Use these 14 tips to help protect your home while you are on vacation.

1. Don’t publicize you are on vacation. The old recommendation was never to leave a message on your home answering machine saying you’re on vacation, but now it’s also important to not post your vacation plans on your Facebook, Twitter or other social media accounts. Most social media posts become a permanent record and it is like announcing your vacation in the newspaper for all to read.

2. Stop delivery of your mail and newspapers or have them picked up regularly by a trusted neighbor. Remember you can put your mail on hold online at https://holdmail.usps.com/holdmail/landingView.do

3. Have a trusted person check on your home. This person will, ideally, stop by as often as possible to check for any deliveries that haven’t been stopped, water plants, open curtains periodically and even move your car from the garage out into the driveway once in a while. This person also needs to have your cell phone and contact infomation in case they have any questions or concerns while you are gone.

4. Install timers on your indoor and outdoor lights. Keeping lights on inside and outside of your home with timers will make it look like someone’s home, or will be soon. Make sure to put at least one light on a programmable timer so some lights can be turned off and on randomly. Programmable timers can be found at most hardware stores for about $20. Also installing motion-detectors on your outdoor lights can help deter potential burglars.

5. Make sure the garage door cannot be opened. You will probably need to disconnect the garage door opener or install a padlock to do this.

6. Arrange for someone to cut the lawn. Nothing gives away an unoccupied home faster than grass that is over a foot long. If you will be gone long enough for the grass to grow too high, make sure a friend, neighbor or hired service will cut it for you. Also make sure that shrubs around windows and doors are cut back, removing all good hiding spots.

 7. Advise the police department and security system company you will be gone. Many police departments will check on your home while you’re away.

 8. Lock all your doors and windows. This may sound obvious, but it’s estimated that 28 percent of burglaries occur without using force to gain entry. In other words, they probably entered through an unlocked window or door. Check all of your windows and doors, including the one leading into your home from the garage, and windows in the basement.

 9. Secure sliding glass doors. Sliding doors can be forced open by intruders. Placing a metal or wooden rod in the track will prevent this.

 10. Remove valuables away from windows and obvious locations. Don’t create a reason for someone to break-in. Make sure all jewelry, money, personal identity and electronics are out of view from all windows. Also hide valuables in non-traditional places like outside of the bedroom.

 11. Unplug everything you can. Other than the refrigerator, freezer and lights on timers, everything — including the coffee pot, computer, TV, toaster, etc. — should be unplugged when you’re on vacation. This is because the circuits are still active and susceptible to lightning and power surges.

 12. Turn off water valves. If you will be gone for a week or more, you may want to turn off the water to your toilets, sinks, washing machine, ice maker and dishwasher.  

13. Tell your neighbor where the water main shut-off is located. A sudden pipe burst can be a major event and extra time searching for the main shut-off could cause significantly more damage.

In conclusion, burglary is one of the most preventable of crimes. By taking a few simple precautions you can dramatically reduce the risks of coming home to an unpleasant surprise.  Feel free to share this list with someone you know who is planning a vacation.  Be safe out there this summer!

When Does a Home Improvement affect my Homeowner Insurance?

The amount of insurance on your homeowner policy is based on the Replacement Cost or the cost to rebuild the home. So when you make an improvement or renovation to your home that increases its Replacement Cost value, your homeowner insurance needs to be updated. However, not all improvements affect your home’s Replacement Cost value. Most minor improvements such as painting, new windows and doors do not affect the Replacement Cost value of the home because you would be replacing existing home features with those of similar kind and quality. However, any home improvement that adds a new feature or is an upgrade does affect your Replacement Cost value and your homeowner insurance policy. Here are just a few examples of improvements that do affect a home’s Replacement Cost:

- Adding a porch or deck

- Adding a new bathroom

- Adding central air conditioning

- Finishing a basement

- Building a garage

- Remodeling a standard kitchen to a customized kitchen

Why is it important to update your homeowner insurance?

1. The Home Impovement May Not be Covered – Most homeowner insurance policies require the value of the home on the policy to be maintained at 100% of its Replacement Cost value and any improvement affecting the Replacement Cost value must be reported to your insurance agent or company. Any improvement not reported most likely will not be covered in the event of a loss.

2. Some Losses May Not be Paid in Full - If the value of the home stated on the homeowner insurance policy falls below 80% of the Replacement cost value, all partial losses may not be fully covered. For example, if you have a covered $10,000 fire loss to any part of the home, you could end up receiving less than $10,000 if the home is insured to less than 80% of its Replacement Cost value.

Overall, it is important to understand that any home improvement may require insurance improvements too. Otherwise, those improvements may not be covered in a home insurance claim and any other home insurance losses may not be paid in full. Make sure to talk with your agent or insurance company to find out if your home improvments affect your specific homeowner insurance policy.

Have you made any home improvements that affect your insurance lately?

Misconception 1: I Don’t Need Insurance because My Business is Too Small

Most people do not consider their hobby or part-time work from home as a business since it is not their main source of income. Thus, they do not even realize that they need insurance for a home based business. If you answer yes to the following 3 questions, you probably have a home based business along with all the risks and rewards associated with owning a business

- Is it a trade, profession, occupation or hobby

- Is it full-time, part-time or occasional

- Is the activity engaged in for money or any other type of compensation

Misconception 2: Doesn’t My Homeowners Insurance Cover My Home Based Business

Homeowners insurance policies were never intended to cover business exposures. The purpose of the homeowners policy is to protect insureds during personal activities. Neither the coverage nor the premium charged is intended to cover a business activity exposure. Thus, most homeowners insurance policies have very limited coverage for most home-based businesses. Below are the common business coverages and exclusions offered on most PA homeowners insurance policies

- No business liability coverage of any kind –no on-premises liability, no-off premises liability, no products liability, no professional liability, Workers Compensation liability, etc.

- No coverage on any detached structure, for example a shed or garage, if used even partly for to conduct business

- Minimal coverage on business property such as computers, fax machines, filing cabinets, tools and inventory – typically $2,500 in your home and only 10% or $250 away from home

What are My Insurance Options for a Home Based Business?

The insurance solution for a home based business is unique for each situation but most can be protected by using one of the following.

- Incidental Business Endorsement – Depending on the type of business and insurance company, you may be able to add an endorsement to your homeowners insurance to extend liability insurance for your home based business. This coverage usually costs around $30-$50 per year but it only covers on-premises business liability only.

- Businessowners Policy (BOP) – A BOP is a package policy that is designed to provide property and liability coverage for some small businesses. Generally, small businesses whose activities or operations involve processing and/or service are eligible for a BOP. Manufacturers, especially with complex liability issues, are not suited for a BOP. A BOP policy can cost as little as a few hundred dollars and it has several optional coverages that can be tailored to fit an individual business.

- In-Home Business Owner Policy – Some insurance companies offer a policy that combines a homeowner and BOP into a single policy and are designed specifically for home based businesses. The policies eliminate gaps and duplications in coverage and the rates reflect the in-home status of a business.

Don’t Risk A lot For A Little

Millions of Americans are operating a home based business without knowledge that they have little or no insurance protection. In the event of a loss, they could be underinsured or uninsured leaving them personally liable. The solution to reduce or eliminate this potentially devastating risk is simple and can cost as little as $30 per year. Don’t risk a lot for a little!

Are you sure if you are covered by home based business insurance?

Chad’s question on what is covered and more importantly not covered is one of the most important questions to ask when purchasing home insurance. Some people believe everything is covered for all reasons but home insurance policies have exclusions and coverage limitations. One example of those limitations are the 11 Special Limits for insuring your belongings (Coverage C). Note that the list below is based on a standard HO-3 home insurance policy and the Special Limits may be different for your specific insurance company. Make sure to check your policy or talk to your agent for the details of your policy.

1. $200 on money, bank notes, coins, precious metals, stored value cards and smart cards

2. $1500 on securities, accounts, deeds, evidences of debt, letters of credit, notes, manuscripts, personal records, passports, tickets and stamps (limit includes cost to research , replace or restore the information from the lost or damaged material)

3. $1500 on watercraft of all types, including trailers, furnishings, equipment and outboard engines or motors

4. $1500 on trailers or semitrailers not used with watercraft of all types

5. $1500 for loss by theft of jewelry, watches, furs, precious and semiprecious stones

6. $2500 for loss by theft of silverware, silver-plated ware, goldware, gold-plated ware, platinum ware, platinum-plated water and pewterware

7. $2500 for loss by theft of firearms and related equipment

8. $2500 on property, on “residence premises”, used primarily for “business” purposes

9. $500 on property, away from the “residence premises”, used primarily for “business” purposes.

10. $1500 on electronic apparatus and accessories, while in or upon a “motor vehicle”. Accessories include antennas, tapes, wires, records, discs or other media

11. $1500 on electronic apparatus and accessories used primarily for “business” while away from the “residence premises” and not in or upon a “motor vehicle”. Accessories include antennas, tapes, wires, records, discs or other media that can be used with any appartus described above.

Now you can see that these “Special Limits” might not be so special if you have an expensive engagement ring or a large amount of business property at home. Fortunately most of the these limitations can be resolved by either using non-insurance risk reduction methods outlined in our prior blog post or by purchasing the right insurance for an extra premium. The key is to be aware that these Special Limits exist so as your belongings change or increase, your insurance provides the coverage you expect. Also look for our future blog post dealing with the business property limitation listed above and other exposures that home-based businesses face.

Leave a comment below and let me know if you were surprised by any of the 11 “Special Limits”.

NAIC Complaint Data for Erie Insurance Exchange

Insurance is an intangible service. It cannot be sampled, tested, touched or recycled. Thus, most people purchase personal and business insurance on the only tangible factor they can measure…PRICE. Although price is a major factor when purchasing insurance there are other factors that need to be considered when choosing the right insurance company.

One major factor to consider is if people are happy or satisfied with an insurance company. The last thing any customer wants, is to pay an insurance company for months or years and be disappointed when they have a problem or a claim. Thus, the National Association of Insurance Commissions (NAIC) compiles complaint data on nearly every insurance company and the information is available to the public!

5 Simple Steps to Get the Complaint Data

1. Paste the link https://eapps.naic.org/cis/ into your browser

2. Under the Company Search for Complaint and Financial Information section on the top right side of the page, enter your insurance company’s name. Then select PA as the Consumer’s Resident State and click the “Find a Company Button”

3. Click on “Closed Complaints Link”

4. Click on “Closed Complaint Ratio Report”

5. Select the insurance type (Ex-private passenger auto) and click the “Create Report” button

At this point you should have a report similar to the one shown in the picture above. The report shows an insurance company’s complaint ratio compared to a national median of 1.00. Any complaint ratio below 1.00 means the company is better than the median company and any company with a ratio above 1.00 means that they are worse than the median company.

Take advantage of this consumer data and find out what customers are saying about your personal or business insurance company…you may be surprised!

Claims May Add Surcharges

Most insurance carriers surcharge an existing homeowner insurance policy once a customer submits 2 or more paid claims in a 5 year period. Even if a policy has 2 paid claims costing $500 or 2 paid claims costing $50,000 in a 5 year period, the homeowner insurance policy will still have the same surcharge. Thus, before submitting a claim it is important to consider the estimated cost of a claim and how much your insurance carrier may surcharge the policy.

A CLUE Records All Claims

In a our prior blog post “Get A C.L.U.E – A Carfax Report for Houses”, we talked about how a CLUE report shows homeowner insurance claims on a property for the past 5 years. However, did you know that all homeowner insurance claims submitted to the insurance carrier are documented on a CLUE report regardless if the claim is paid or not. Thus, it is always good to talk with your insurance agent to understand if your claim is covered or excluded before it goes on a CLUE report for the next 5 years.

Claims Information Can be Available to Buyers

Home buyers and real estate agents can now get a CLUE report by requesting the seller to purchase a CLUE Home Seller’s Disclosure Report from Choicepoint. This special CLUE report removes all the personal information about the property owner but it still has the 5 year claims history. Thus, it is important to remember that submitting a homeowner insurance claim could impact a future real estate transaction.

Overall, submitting a homeowner insurance claim can be a very smart decision but make sure to consider all the implications of a claim with your agent before submitting one. Being surprised when your next homeowner insurance bill comes in the mail or when you try to sell your home is never a fun experience.