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What You Might Not Know About Your Homeowner’s Insurance in NJ

One of your biggest investments is your home and its contents.

In this article, we’ll walk you through what you need to know to safeguard that investment.

Continue reading to learn what homeowner’s insurance in NJ can do, what to look for in a policy and factors that will impact your rates.

8 Ways Homeowner’s Insurance Can Protect You

A homeowner’s insurance policy can protect you from risks in ways you may not even realize. Some standard coverages include the home itself liability protection against slips and falls.

There are various other coverage options available, such as debris removal, identity theft or the unauthorized use of your credit cards. To find out more options available, continue reading, or watch our video summary below.

1. Your Home Itself

Usually referred to as the “dwelling” in the policy, this part of your policy will cover physical damage to your home itself.

This could include damage to the roof, doors, walls, floors and more, as long as it is permanently part of the structure of the home.

Most policies also cover detached structures like a shed or garage.

2. Liability Protection

This will protect you and your family (including pets) from lawsuits occurring as a result of bodily injury or property damage that happened in or around your home.

It will cover court costs and any awards you are required to pay (up to the policy limits) and provide coverage if a guest is injured in your home, even though you may not be responsible.

This means that if someone slips and falls down the stairs, your policy can pay their medical expenses, and they don’t necessarily have to file a liability claim against you.

This coverage will not cover medical expenses you or your family member may incur because of an accident in the home, for which you would submit a claim to your health insurance.

3. Personal Property Theft Outside Your Home

While it may be called a “homeowners” policy in New Jersey, your policy typically follows you outside the home.

This can include protecting you and your family from the loss or theft of your personal possessions, or liability from injuries and property damage that occur outside the home, as well as electronics or other valuables stolen from your vehicle, or if you lose your luggage with valuable items inside.

It’s often called “off-premises” coverage, and unless you opt-out of it, it will cover you everywhere you go. You can always be at ease knowing your belongings are protected.

4. Additional Living Expenses & Alternate Living Arrangements

This policy will pay for costs in case you and your family have to stay elsewhere due to your home becoming unlivable. If your home suffers a loss and you are no longer able to live in it, you may not have a lot of options on where to stay.

For example, if your home is being repaired due to extensive foundation damage, or something like a mold problem, your policy will cover costs you incur to stay in a hotel, including eating out at restaurants and various expenses such as laundry.

This coverage can vary between policies, so it is important to speak with your agent to know what is best for you and your family. Usually, alternate living arrangement costs are set at up to 20% of the dwelling coverage limit, which will give you peace of mind if your home becomes uninhabitable.

5. Protection of Other Structures

A homeowner’s policy extends coverage to additional structures that are part of your property, but separate from your home, like a garage, shed or fence.

If a strong storm comes through and causes damage to one of these structures, your homeowner’s policy will take care of the costs to replace or repair the structure.

6. Landscaping Costs

Landscaping a home can cost thousands of dollars. Fortunately, a homeowner’s policy can cover things like trees, shrubs, and plants.

A typical policy will afford coverage up to about $500 per item. Damage caused by wind or disease is not included in the policy, but other perils typically are.

7. Building Code Upgrades

Occasionally a homeowner’s association will require upgrades be made to a property in order to meet their codes.

Whether they change the codes to make them more stringent, or they find that your home doesn’t meet them, a homeowner’s policy can provide coverage to make improvements to get your dwelling up to code.

This coverage often isn’t automatically included, so you’ll want to speak with an agent if you think it’s something that you might need.

What to Look for in Home Insurance

With dozens of companies to choose from for home insurance, confusing jargon and complex contracts that look more like law school textbooks than policies, it can be a real challenge to know which company deserves your business.

Because of this, many homeowners will purchase insurance and not think about it again… until the need it. You don’t want to find out that your policy has holes when an incident occurs and it becomes time to make a claim.

Shopping for home insurance doesn’t have to be difficult, not if you know what to look for. Keep reading to determine what you should look for in a homeowner’s policy.

Customer Service Beats Price

Buying home insurance isn’t like paying your taxes. The point isn’t to pay as little as possible. It’s to protect your financial well-being against disaster.

This means that buying coverage with a company known for paying out on its claims is vital. There’s no point in saving $100 per year now and then being stuck fighting for months to settle a claim when your back is against the wall.

Shop around for a better deal but know that the lowest price is likely not always the best value. We suggest researching which providers feature top customer service ratings and then compare between these companies.

Replacement Cost or Cash Value?

Those new to buying home insurance find this distinction to be confusing–but since many providers let you choose one or the other, it’s important to understand the difference.

Say your home burns down and all of your possessions are destroyed. If a computer you paid $1,000 for 4 years ago is covered for its replacement cost, the insurance company will cut you a check for whatever it takes to buy you a similar computer now. If the same computer is covered for actual cash value and a 4-year-old computer is worth $150, you will only get $150.

This example isn’t meant to imply that replacement cost is “better,” just that it is different. After all, a lower level of coverage will carry a lower premium.

Check for exclusions

Assuming that all policies cover the same hazards is a recipe for disaster.

When determining whether your coverage is adequate, always run through the list of exclusions so you understand under which circumstances you cannot file a claim.

Here are commonly excluded hazards:

  • Earthquakes
  • Hurricanes
  • Flooding (more below)
  • Sump-pump failure
  • Forced upgrades from updated building codes
  • Burst pipes from freezing (coverage may be voided if you do not take precautions to prevent pipes from freezing)
  • Swimming pools and hot tubs

Remember, additional policies and endorsements can be purchased to include coverage for these hazards.

More About Flooding

Many insurance companies don’t include coverage for flooding in their basic policies. If you don’t specifically ask for it, your policy may not cover flooding.

To get the coverage you need for flooding, you may need to go through a federal program that run by FEMA.

The National Flood Insurance Program could offer the coverage that you need. This is an especially good idea if your home is in an area where water can collect.

Can You Afford the Deductible?

Changing your deductible is a great way to lower the price of your premium but when comparing policies, never purchase a plan with a deductible so high that you wouldn’t be able to afford it should disaster strike.

Ask About Discounts

Installing deadbolt locks or a security system are common strategies for lowering your premium. Some companies cut your rate if you replace your roof or purchase auto insurance in conjunction with your home coverage.

Check Your Liability Coverage

In today’s litigious society, it can be a smart move to up the limits on your personal liability coverage. Opting for the bare minimum puts you at risk of losing other assets in the event of a lawsuit resulting from an accident on your property.

Simultaneous Event Coverage

There are cases when two events occur at the same time. If you don’t have coverage for one of these events, the insurance company may deny your claim for both events.

If there is damage from a flood and damage from high winds, and your policy doesn’t cover the flooding, that could mean it does not cover you at all.

Avoid High Deductibles

To keep premiums down, many companies offer policies with high deductibles, which means you’ll have to pay a large amount out of pocket if an incident occurs.

When your deductible is more than the amount of the claim, you could end up paying for everything. Avoid high deductible plans if possible.

16 Factors that Impact Your Homeowner’s Insurance Rates

Besides the value of your home, several factors influence how much you pay for homeowner’s insurance in NJ. Here are some of the most common you will encounter.

1. Credit Score

As with car insurance, people with higher credit scores tend to make fewer homeowner’s insurance claims.

A long, established credit history, a low percentage of debt compared to your total credit line and a history of on-time payments will result in lower insurance premiums.

2. Marital Status

Married couples make fewer insurance claims than singles and pay lower premiums as a result.

3. Pets

Owning certain dog breeds that are considered “aggressive,” like pit bulls, rottweilers and dobermans, can raise your premiums due to the increased risk of a liability claim.

Signing a waiver for dog bites can reduce this cost. Exotic pets will also raise your rates and can even make you ineligible for regular policies.

4. Location

Homes in areas prone to any natural disasters will cost more to insure. In Monmouth County, expect to pay more for most properties due to the chance of hurricane damage and flooding.

5. Proximity to Fire Services

Homeowners can receive insurance discounts based on how close they live to a fire station or fire hydrant. This proximity reduces the risk of a total loss in the event of a fire.

6. Age of Your Home

Older homes are generally more susceptible to damage from deterioration and the elements. Carefully maintaining your home—especially the roof—can offset some extra insurance cost.

7. Building Materials

Homes made of brick are cheaper to insure than those made of wood and other flammable materials.

8. Home Additions

When you add to your home, these additional assets must be protected. Pools, decks, patios, garages and sheds will increase your property’s value and therefore increase your premiums.

In addition, these new structures can open you up to a larger amount of liability. For example, individuals can slip by your pool. This makes your property a riskier investment and causes your premiums to rise.

9. Remodeling

Home renovations are expensive, and also expensive to rebuild in the event of a loss. Make sure you let your insurer know about any remodeling as soon as possible.

10. Swimming Pools, Hot Tubs & Spas

Pools pose a significant drowning risk, especially with small children.

Even non-fatal drowning incidents result in hospitalization more than half the time according to the CDC, compared to a hospitalization rate of just 6% for other accidental injuries.

11. Trampolines

Trampolines cause thousands of injuries requiring hospitalization every year, many of which are head and neck injuries and injuries to small children.

As a result, trampolines are almost never included in a basic homeowner’s insurance policy in NJ. Many insurers will not cover a home with a trampoline at all.

12. Replacement Cost

You should insure your home for the amount it would cost you to rebuild the exact same home in the same place if you were to suffer a total loss. The replacement cost is different from the market value and probably more than it would cost to pay off your mortgage.

Since the cost of building a new home fluctuates with the price of labor and supplies needed, your coverage and hence your premiums also fluctuate. In normal circumstances, there is inflation in all prices in the economy, so the replacement cost for your home tends to go up and your premiums also rise.

13. Deductible

The higher the deductible on your policy, the lower the premiums. A deductible below $500 is rarely worth the extra cost, and raising it from $500 to $1,000 can save you as much as 25% in premiums.

14. Liability Limits

Many liability limits are too low to cover the full cost if someone were to be seriously injured in your home. A liability limit of at least $300,000 instead of the standard $100,000 will cost you a bit more, but can be invaluable if the worst should happen.

15. Living Expenses

In the case of the loss of your home, most homeowner’s policies will pay for you to stay somewhere else while your house is being replaced or repaired. You could be staying in a hotel for a long period of time and even some of your expenses for eating out at restaurants could be covered.

These costs of living elsewhere and eating out also rise with inflation so the amount of money your insurance company would need to pay rises over time. This need to cover additional living expenses causes your policy premiums to increase over the years.

16. Claim History

Prior claims are the best predictor of future claims, so insurers charge higher premiums for homeowners with multiple claims—even if they were at an old home.

Your C.L.U.E. (Comprehensive Loss Underwriting Exchange) Personal Property report from Lexis Nexis will show you all claims from the last seven years, including the date of each loss, the type of loss and the amount paid out by your insurer.

As with automobile insurance, if you submit claims on your homeowner’s insurance your premiums may rise, as your insurance company may judge your property a higher risk investment.

Regardless of the homeowner’s insurance policy you need in New Jersey or what your situation is, the experienced agents at John B. Wright are here to find the best fit for your needs.

To find a solution tailored to your individual needs, contact us today.