Shannon Harvey Insurance

These are a few of the Frequently Asked Questions that we receive regarding Homeowners Insurance:

• DOES A HOMEOWNERS POLICY INCLUDE FLOOD INSURANCE? Homeowners policies usually do not provide coverage for flood damage. However, if your community participates in the National Flood Insurance Program, you may be able to purchase flood insurance from a local insurance company. The cost varies based on a number of factors. What happens if you decide not to buy this type of insurance and your home is flooded? You'll only receive federal disaster assistance if the flood is declared a disaster by the U.S. president. The assistance is typically a loan which must be paid back with interest. If you buy flood insurance from an insurance company, claims are paid even if a disaster is not declared by the U.S. president. Better yet, there's no payback requirement.

• I HAVE A POLICY WITH "REPLACEMENT COST". DOES THAT MEAN MY INSURANCE WILL PAY TO REBUILD MY HOME? Typically, replacement cost means your insurance will pay the cost (up to policy limits) of rebuilding or repairing your home without a deduction for depreciation. However, it may not take into consideration price increases for labor and supplies. A policy with extended replacement costs, like Allstate's Your Choice Home with Coverage Cushion, may provide better protection by paying a percentage over the limit to rebuild your home. For example, if you purchased insurance with an extended replacement cost of 20% on a $200,000 policy, you could get up to an extra $40,000 in coverage to pay for the additional expenses of replacing your home.

• IF I FILE A CLAIM, DO I HAVE TO WORK WITH THE INSURANCE COMPANY'S CONTRACTORS? The process for selection of a repair company may vary by insurance company. With Allstate, you can choose the repair firm, and an Allstate claim representative will work with them to agree to the cost. Or, you can choose a contractor participating in the Allstate vendor referral program, and a workmanship guarantee will be issued on behalf of the vendor for up to three years from the date the repairs are completed.

A friend who has worked for many years in our Claims Department often says: "A Homeowners Insurance Policy can take a left-turn on you in a hurry." We've found the better a customer understands the policy, the less often they'll be confused when a bit of bad luck turns up and a claim has to be filed.

Renting out part of your house can be a great source of passive income, especially in this economy. Good for you!

When it comes to home insurance, your policy is made up of several types of coverage. One is designed to protect the structure-your home itself. Another is meant to protect what's inside the home-your stuff.

Your home insurance policy will protect your home itself whether you rent out part, all, or none of it. But your tenant's possessions will only be covered if they're related to you. You might consider encouraging them to get renters insurance. You'd certainly hate for something to happen, especially if they're not properly protected.

If you're renting out a finished basement or garden apartment, keep in mind that the drywall, carpeting, and fixtures aren't protected by structure coverage. You may need to increase your personal property coverage to make sure they're protected in case of a fire, or other damage.

Remember, it's always a good idea to talk to an agent if you have questions about your home insurance policy.

You're definitely not the only one! Ask your mortgage lender about using an escrow account for your homeowners insurance. That way your monthly mortgage payment will be adjusted to include your home insurance premium. When your next premium is due, your lender will pay it using the money in your escrow account.

Say your home insurance is $600 a year. That works out to $50 a month, so the amount you send to the mortgage company each month would be increased by $50. Each month, that $50 would be deposited into your escrow account. When the bill comes due, your lender will send a payment from your escrow money.

It's so common to include escrow that the industry has come up with an acronym to describe how the mortgage payment breaks down: PITI (Principal on the mortgage / Interest on the mortgage / Taxes held in escrow / Insurance held in escrow).

Read more about homeowners insurance.

I recommend talking to your lender about the escrow before you close on the house...and remember, this is different from the escrow for closing costs. For one thing, you need to make sure you'll have an escrow account. While they're common, not everybody has one. You might also want to ask whether there's a minimum balance for escrow accounts, how your monthly payment will be adjusted if your insurance rate changes in the future, and whether your property taxes can also be included in your escrow payment.

Your family's security primarily depends on having a safe, comfortable place to live.  This is where your homeowners policy comes in.Your policy will contain a description of your home's structure and a list of excluded events. If something happens, you can make a claim. Your Residence Type Matters Structures vary so widely that a different policy is required for each type of home.

• A Condo policy typically covers interior structures like wallboard and lighting fixtures. Depending on your state, your association by-laws, and insurer, external walls will not be covered.
• A Home's entire structure is covered along with sheds and detached garages.
• A Manufactured Home's entire structure is usually covered, while sheds and garages may require an optional policy.
• A Renters policy usually has no physical structure coverage at all, but it does provide essential liability and contents coverage.

Most Unfortunate Events are Covered Most insurance companies offer coverage for the same events that may damage the structure of your home, including fire, smoke, lightning, wind, hail, frozen plumbing, theft, explosion, vandalism, the weight of ice and snow, and a few others.

Excluded Events are Named in the Policy An agent can explain the events that would not be covered by your specific policy when it comes to your home's structure. Typically, floods and earthquakes are excluded from basic policies, but you may be able to get insurance for those with separate policies. A few other conditions most companies specifically exclude are mold, fungus, wet rot, dry rot and bacteria.

Click here to read more about Homeowners Insurance.

When insuring your home's structure, make sure you plan for the worst even if you're hoping for the best.