1. Homeowner’s Insurance Note Information in this presentation is derived from Insurance for Dummies by Jack Hungelmann. I highly recommend this book.

2. Odds of a house burning down: 1 in 1,200 Source: www.ricedelman.comwww.ricedelman.com But there is more to home insurance than fire insurance

3. Six Parts of a Homeowner’s Insurance Coverage A: Damage to residence B: Damage to detached structures C: Damage, theft of personal property at home or anywhere D: Living costs (e.g., hotel, meals) E: Non-vehicle personal liability for injuries/property damage at home and anywhere F: Medical payments to guests injured on your property

4. Coverage A: Insuring Your Home Bottom Line: Insure for 100 percent of the replacement cost of the property – Long story short, if you do not at least insure for 80%, you may not be fully insured in the event of partial damage (e.g., kitchen fire). Keep in mind, if you pay, say $300,000 for a house, that cost includes the land. If your house is appreciating each year, you may need to increase the insurance

5. Example Purchase home for $300,000 ($250,000 house, $50,000 land) X years ago Original Insurance, Coverage A: $250,000 If the replacement cost on the house is now $500,000, you would not be 100% insured

6. Coverage B: Insuring Detached Structures (e.g., garages Bottom line Most policies extend 10% of Coverage A

7. Coverage C: Personal Property Typically, coverage = 50-75% of coverage A Two ways policies value property 1.Actual cash value (used) 2.Replacement cost (new) Replacement cost is typically only 10 percent more so it should be a reasonable purchase

8. Coverage D: Loss of Use Typically, coverage = 50-75% of coverage A Two ways policies value property 1.Actual cash value (used) 2.Replacement cost (new) Replacement cost is typically only 10 percent more so it should be a reasonable purchase

9. Coverage E: Personal Liability Very Important Coverage! Covers liability for injuries and property damage, lawsuits, defending lawsuits, covering most non-vehicle personal liability worldwide

10. Examples of Claims Coverage E Covers You hit the catcher with a baseball bat playing baseball You spill a drink on the neighbor’s living room carpet ruining the carpet

11. Personal Liability, Coverage E General Rule: Set the personal liability on homeowner’s at the same level you set liability on other policies (e.g., auto) Rationale: nobody knows where a law suit or injury may come from, so buying the same dollar coverage makes sense.

12. Coverage F: Guests’ Medical Bills For guests who get hurt at your home. Importance: Minimal because most people will have health insurance. If the individual sues, your personal liability insurance will protect you.

13. Homeowner’s Insurance typically does not cover Earthquakes, tremors, landslides, sinking or shifting Water that enters the house at or below ground level (e.g., sewer backup, flood) War