Home & Renters Insurance Guide

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Fletcher Nance & Associates
Bill@FletcherNance.com

House

Apartment or Condo

Automobile

Mobile Home

Insurance Policy:
A binding, legal contract between the policyholder and the
insurance company to protect their home and belongings if
they are damaged, destroyed or stolen.

Protection From Fire, Storm,
Weather and Theft

Anyone named in the policy: spouse,
children, residents or guests
It can Protect detached structures too:
garages, sheds, pools
Who & what are protected?

Renters Insurance
Protects individuals who live in a house, mobile home,
condominium, or apartment that is owned by another
person
Protects against:
•Theft
•Loss of personal property
•Loss of use
•An average two bedroom apartment can easily contain
personal property that would cost more than $20,000 to replace

Your landlord or association may have
insurance, but it only protects their
building
Your belongings are not covered under
their policy

Actual Cash Value (ACV)
ACV coverage only pays for what the property was worth at
the time of loss, its current value.
Replacement Cost
Replacement cost coverage will pay what it actually costs to replace
the items you lost.

How to Reduce Risk
• Keep an inventory of your personal
belongings
• Keep receipts for major items
• Lock your doors
• Use your deadbolts
• Don’t let your house look vacant
• Maintain your home

PROPERTY INSURANCE
Insurance that protects you from loss of real and personal
property
Real property- Property attached to land such as a
house, business, garage or another building
Personal property- Includes possessions that can be
moved like furniture, jewelry and electronic equipment

TYPES OF PROPERTY INSURNACE
Extended coverage- protects against damage from
windstorms, aircraft crashes, hail, falling objects and
explosions and vandalism.
Liability Protection- protects you from the costs of injuries to
others on your property. It pays for medical expenses and
legal costs.
Additional Living Expenses- It pays for the cost of renting
another place to live if your home is damages. The coverage
is limited to 10-20% of the coverage on your home. The time
can be limited from 6-12 months.

Business Insurance- Business owners can
get insurance to cover the costs of the
property and liability insurance to protect
themselves from claims by anyone injured on
the premises

Homeowner’s Policy- provides protection
against loss from the eleven perils
Eleven Perils- The most common causes of property damage or
loss. They include:
Fire or lightning,
Loss of property from fire,
Windstorm or hail,
Explosion,
Riots,
Aircraft,
Vehicles,
Smoke,
Vandalism
Theft
Breakage of glass
All homeowner’s policies cover the eleven perils.

The six types of Homeowner’s policies are:
1. HO-1 Basic form is the least expensive policy. This policy protects a
home and personal property against the eleven perils. It also covers
liability insurance, damage to personal property and temporary living
expenses.
2. HO-2 –the most popular policy or Broad coverage adds 7 additional
types of coverage including, ice or snow damage, internal pipe
damage causing water damage, electrical fires and falling objects.
3. HO-3-provides maximum protection for the house itself, with less
coverage for personal property.
4. HO-4- is the policy for renters covering personal property.
5. HO-5- the all risk policy provides the most comprehensive coverage. It insures
a building and its contents with maximum coverage. It is the most expensive
policy.
6. HO-6- is a policy for condominium owners. It covers personal property and
anything else inside the unit.

Homeowner’s Policy
Special coverage's-Most homeowners policies cover special items
such as jewelry for limited amounts. You can buy additional insurance
for special items such as coin collections, or other valuables such as
antiques.
Rider-An addition to the policy that covers specific property or
damages. Riders are often used for jewelry, art or antiques.
NONE of the homeowner’s policies cover loss from floods,
earthquakes, landslides, war or nuclear hazards. If you live in a flood
zone, you must purchase flood insurance (if you have a mortgage)

Amount of Insurance
Insurance companies recommend that you insure your home
for 80% of its market value since fires do not destroy the land
or foundation.
As the value of your property increases you should also
increase the amount of your insurance. You can insure
property for either its actual cash value or its replacement
cost. The replacement value is the full cost of repairing or
replacing the property today, regardless of the depreciated
value.

Property insurance has many of the same costs vehicle insurance does.
The number of claims affects the overall cost. The premium depends on
the amount of coverage and the type of policy you want. Factors that affect
price include:
1. Deductible-amount of money you pay out of your pocket before
insurance coverage begins. The higher the deductible the lower the
premium.
2. Location-Urban areas usually cost more. Access to fire hydrants
also can affect cost.
3. Type of building-A house made of brick will cost less than a house
constructed of wood. The larger the house the higher the premium
4. Preventative measures-burglar alarms or smoke detectors,
deadbolts and sprinkler systems.

Basic Parts of an Insurance Contract
Declarations
Personalizes the insurance contract to the
insured
• What makes this contract different than others
issued
Usually first page of an insurance contract
contains such things as:
• Identifies the insurance company
• Identifies the named insured
• Policy period
• Policy limits
• Deductibles
• Premium
• Identifies forms and / or endorsements

Deductibles
Straight deductible - amount paid by insured before the insurer
pays any money
Example:
$25,000 loss
$20,000 coverage
$ 1,000 deductible
Deductible from the loss
$25,000 - $1,000 = $24,000; $20,000 paid because hit policy limit

Reasons for Deductibles
• Reduces moral and morale hazard since
insured pays a small portion of each loss
• Eliminates the expenses involved in small,
frequent claims and most losses are small
• As a result premiums are lower

Exclusions
Identify losses that are not covered
Designed to:
• Eliminate catastrophic events - flood, war
• Eliminate moral or morale hazards - intentional
loss, failure to protect property
• Require extra charge - unfair to charge all
insureds for covering $100,000 gun collections
• Eliminate coverage where another policy is
specifically designed for the coverage

Endorsements
Modify standard insurance contracts in predetermined
ways - examples
• Expand coverage
• Delete exclusions in contract
• Change definitions
• e.g.: “ sporadic baby-sitting is not a “business”
• Add locations / insureds / perils
• Add additional insureds

Conditions
If you want the claim paid, you must meet the conditions
stated in the contract. These include:
• No Concealment or Fraud
• No Suspension of coverage
• Cancellation – policy must be in force
• Other insurance does not apply or loss is shared
• Meet your duties after a loss
• Abide by the appraisal procedure
• Agree to salvage
• Agree to claims payment - time limits

Income
PropertyPerson
What Does Insurance Protect?

INFLATION-ADJUSTED U.S. CATASTROPHE
LOSSES BY CAUSE OF LOSS, 1992-2011

Policy – a contract stating all the specifics about the insurance
being purchased
Insurer – the person or company issuing the insurance policy
who also assumes the risk
Insured – the person(s) being covered by the insurance and who
buys the insurance
Deductible – the amount of money that has to be paid before
the insurance company pays the remainder of the claim
Premium – the amount the insured pays in exchange for
receiving protection by having the insurance
Common Insurance Terms

Auto Disability
Homeowner’s Vision
Renter’s Dental
Health Flood, Earthquake,
Hurricane
Life Business
Common Types of Insurance

Age-Teenagers,
< 25
Tickets
Accidents
Age/Type of
Vehicle
(sports car)
Poor
Credit
Driving
Many
Miles
What Raises Auto Insurance Costs?

Good Grades
Age > 25
> one car on
policy
Vehicle Safety
Rating
Vehicle
Repair Costs
Driver Education
Program
What Lowers Auto Insurance Costs?

• Dwelling (the house itself)
• Injuries
• Theft, fire, tornado
• Rider- covers items not
covered in the regular
policy, such as higher
jewelry amounts
Homeowner’s Insurance

Renter’s Insurance
• Damage to property
• Theft of property
• Possibly living expenses

Life Insurance
• Pays a pre-determined amount in the event of death
• Usually more appropriate for people with dependents
• Usually more appropriate for people with debts and expenses
that will need to be paid for
• Can replace lost income if the main wage earner dies

Disability Insurance
• Short-term- replaces part of your income for
a short time period, maybe up to a year or
so, due to injury, illness, or extended
maternity leave
• Long-term- income can be partially replaced
for a longer time period, possibly years

Flood, Earthquake, Hurricane
• Covers property and contents in areas prone to these
natural disasters
• The Federal Emergency Management Agency
(fema.gov) provides information on preparing for
natural disasters and disaster insurance

Affordable Care Act
• Signed in March 2010
• Makes preventive care more easily accessible and inexpensive for more
people
• Allows children to be on a parent’s health insurance plan until 26 years
of age
• Beginning in January 2014, pre-existing conditions can no longer be a
cause for denials or higher insurance rates
• Enrollment in the Health Insurance Marketplace begins in October 2013
• New and expanded coverage begins January 2014

Minimize All Kinds
Of Risk Using The Right
Combination
Of Insurance Products
From
Fletcher Nance

Contact Fletcher, Nance and Associates
For any additional questions or to have
the best insurance portfolio put in place
to minimize risk for you and your family
Fletcher, Nance and Associates
Bill Nance
206-979-6009
Bill@FletcherNance.com

Home & Renters Insurance Guide

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