Homeowners insurance can be designed for your specific needs in New Jersey:
- A basic homeowner policy which covers a building is a broad form policy, or named perils, which means hazards like fire, windstorm, hail, lightening, smoke, riots and civil commotion are covered. Contents are covered for the same hazards and theft. Additional living expenses are a percentage of the building coverage.
- Do you rent your home? Homeowner policies are for owner occupied premises only. These need to be on special policies called Dwelling Forms.
- Condominium policies are similar to homeowner policies but add coverage for special exposures like loss assessment. Unit owner policies need to be tailored to your specific situation as not all condo associations provide the same coverage.
- The next highest level of coverage is similar to the broad form, except the buildings are covered for Special form perils. The distinction is special form includes every peril except those excluded. Exclusions include acts of war, government seizure, and inherent rot or vice. Broad form claims require the homeowner to prove the cause of loss, while the special form moves the responsibility to the insurance company to prove the loss is excluded and reject the claim. Contents for both forms are based on broad form perils.
- The highest form of coverage is similar to the special building form except contents coverage is special form.
Important factors in determining how much homeowners insurance you need:
- Replacement cost of your home. Donnelly and Sproul have tools to determine local building costs in New Jersey. Square footage, outbuildings, the number of plumbing fixtures, construction type, and kitchen appointments are a few variables which determine replacement cost.
- Mortgage requirements.
The year your home was built can be an issue if it is not code current. Some materials are no longer in common use. Not all policies offer “Law & Ordinance” coverage. This coverage provides for the increased cost of re-construction due to the enforcement of a building code. This can be substantial for older homes.
The valuation of the building and personal property can be either actual cash value or replacement cost. Replacement cost is exactly what it sounds like: the cost to replace the item or similar item. Actual cash value is determined by deducting depreciation from replacement cost.
As a practical matter, what does this mean?
If your personal belongings are all new, replacement cost equals actual cash value, same for the buildings. The older the building is, the greater the difference between actual cash value and replacement cost. Consider a tree destroying a twenty year-old roof. Replacement cost coverage installs a new roof. Actual cash value may reimburse one third of the cost. The house, practically speaking, needs a roof, not one third of a roof so actual cash value is of little help.
Inventory your belongings by taking digital pictures of each room and extra valuable personal items like furs, jewelry, and collectables. Keep a copy of those pictures in a safe place away from your premises.
Many insurance companies will negotiate premiums based on handling several policies for the same risk. One way to reduce costs: have your Donnelly and Sproul agent review your homeowners, automobile and personal umbrella. Ask about specific high value personal items.
Call us today at 201-493-9002 or email to discuss how we can help with your homeowners insurance in New Jersey!