Homeowner Insurance for Brits Buying Abroad

Homeowner Insurance USA

Introduction - many of Assetsure customers are now buying properties in the United States of America. Florida is particularly popular for a Holiday Home. Whilst we are unable to transact home insurance in the United States, we have put together this little guide which we hope will help you understand the different types of cover available to home owners Homeowner insurance is a common term used for home insurance policies that are sold in the United States. As with most property insurance policies, a homeowner insurance falls in to various sections all affording different levels of cover.

Part A- The House - This section of the policy is often viewed as being the most important. Here you will find stated how your home is insured (or not insured) as the case may be. You should always insurer for the full rebuilding cost of your home, if in any doubt, professional assistance should be sought. The cover that you are provided with will demand on the actual policy accepted (more on that later).

Part B- Additional Structures- Under this section of your homeowner insurance, additional structures are included, this is for items not attached to the main part of your building, the garage, greenhouse, or shed for example. It is typical for insurance to give a sum insured of 10% of the total rebuilding cost for this cover.

Part C-Personal Property- This section affords cover for your personal belongings, the contents of your home including furniture, electrical items, clothing and personal effects.

Part D- Loss of Use- if your home becomes uninhabitable as a result of an insured peril, then this section of your homeowner insurance policy will pay for your expenses whilst you are away from the property. This expense normally relate to alternative accommodation cover whilst your home is being reinstated.

Part E- Personal Liability- An important section of your building insurance policy, this section of the policy covers you for liability claims should someone become injured on your property. Lawsuits can prove to be expensive in the United States, and it is usual for this section to cover defence costs as well.

Part F Medical Expenses. A section of your policy that will help pay medical bills for people injured on your property through your own activities Now that we have mentioned the various sections of a home insurance policy let us have a look at the actual levels of protection afforded by the contract.

Actual Cash Value - Your building or property is covered for the depreciated amount of the replacement value at the time of the loss. As time goes by the value of your home will drop.

Extended Replacement cover - Under this option, your home or property is covered up to a specified amount. For example your home may be insured for $200,000 with a $250,000 policy cap. In the event that you suffer a loss and it is decided that your home needs to be rebuilt. Then your extended home insurance policy will pay up to $250,000 of rebuilding costs.

Guaranteed Replacement. - This is the best type of home insurance policy, it does cost more money but it offers the best cover. There is no cap on the sum insured and you will have the benefit of guaranteed replacement following a loss. You may have paid a lower amount for your property but over the years, you have added to, replaced, extended and improved the home to increase its value. This policy will help you retain the true value of your home.

Peril Options - as well as the above which could best be described as methods of describing how your claim may be settled an American homeowner insurance policy offers a range of peril options. This perils options are denoted by the term “H”:-

H01 or basic homeowner insurance will cover damage to your home resulting from a limited number of perils, these would include fire, theft and vandalism.
HO2. This is known as broad homeowner insurance and will offer the same perils as HO1 but is extended to include a number of natural causes. It is usually a little more expensive but you will also receive such covers ice, snow and falling objects.
HO3 or Standard Homeowner Insurance is the most common type of homeowner insurance policy; it covers damage resulting from most natural events. However and please note this most carefully. Flood Insurance and Earthquake insurance are not covered as standard perils. These have to be purchased as optional extras and the rating very much depends on what part of the United States your property is located.
Fair Play Policy- This is a government introduced insurance known as the FAIR plan (Fair access to insurance). Covers may be limited but it is designed for properties that are located in run down or crime hotspots.

Many Brits travel to a holiday home in the United States and their home is described as a Condo, Insurance3 for Condominiums is a separate class of insurance. If your property is a condominium, then all the owners in the block share the costs for the public grounds etc. There is unique cover called HO6. This policy will cover areas owned by each condo owner. The additional cover for shared sections is purchased by the condominium association.

Homeowner Insurance - Policy differences - in the United Kingdom homeowner insurance policies are made unique to each individual purchaser by the addition of endorsements. These endorsements alter the basic policy wording and can not only restrict cover but they can increase it as well. In the United States of America, it is also common to use endorsements as a method of altering a policy form and here, they are also known by the term “ floaters”. These endorsements or floaters are more common that in the United Kingdom and there certainly are a number of them that you should be aware of. If you are unfamiliar to home insurance that can be purchased in America, have a look at the following which are some typical floaters.

Scheduled Endorsement - Almost all insurance companies have established certain reimbursement limits for amounts you can claim on personal items. As a result of this, precious or valuable items such as antiques or jewellery may be afforded adequate protection under the standard home insurance policy wording. Each scheduled endorsement provides cover for a specified item and will contain a full description of the item and a sum insured. It is this sum insured that will be paid out in the event of a claim. This is fairly similar to a UK building and contents insurance policy where insurers specify a limited for valuable items as a percentage of the total sum insured. It is also common to state a single article limit over and above which, items must be specified. A certain amount of extended cover is also available (All Risks) having scheduled item cover under you home owner insurance policy can significantly increase your premium.

Blanket Endorsement - Instead of scheduling a list of individual items, a single blanket endorsement will cover a wide range of your personal possessions. It provides blanket or unspecified cover over jewellery, valuables, sports equipment etc.

Earthquake - Earthquake Insurance may be added to your policy as an optional extra. Unlike the United Kingdom where it is a standard peril, in the United States, it is mainly an optional extra. If you have cover under this floater, you are normally indemnified for claims resulting from earthquake, tremors and aftershocks. An excess or deductible is required and this is usually 10% of your sum insured. Thus if your claim is for $500,000, you excess or deductible will be $50,000.

Ordinance & Law - All homes should be built paying attention to all construction laws and codes in force at the time. Over the years, often as a result of changes to health and safety legislation, these laws can change. If your home were to suffer a large amount of damage you may find that your policy would not reinstate your property up to the requirements of the new codes. The ordinance and law floater will provide extra cover so as your home can be reinstated up to the requirements of the latest codes.

Personal Injury - This is a form of extended liability insurance cover. The cover provided under the standard homeowner insurance wording cover normal more physical injuries (someone breaks an arm at one of your dinner parties). Personal Injury helps protect you from situations such as law suits of slander and defamation of character. In some cases, this cover is already included and you may not have to pay any extra.

Income Property - Your standard homeowner policy's liability coverage doesn't include structures you rent for personal income. In the United Kingdom, this is normally dealt with under a buy to let insurance policy. Here t you obtain cover under Income Property" which will cover you in you rent out part or all of your property. You will certainly need this cover if you intend to make your holiday home available for rental. Although your tenant may have his/her own Renter's Insurance policy, the premises liability may still fall on you and as such you need to insure against this eventuality.

Home Day-care - The Home Day-care floater is a requirement if you operate such a business in your house. Your standard policy will not cover any liability claims should they occur and this will extend cover if you decide to operate this kind of business. Other business types can be considered, remember to refer each one to your broker or agent.

Guaranteed Dwelling - The market value of your home is calculated by a number of factors including the land it sits upon, the quality of local schools, the local infrastructure, local social issues and the desirability of the neighbourhood itself. Home owner insurance does not cover this market value; it only covers your home's replacement value (how much it would cost to rebuild). With Guaranteed Dwelling, your insurer will cover the cost of rebuilding your home even if it is in excess of your policy limit. For example, your home is "worth" $500,000 on the market, but would only cost $400,000 to rebuild. With Guaranteed Dwelling, your insurer would pay the extra $100,000 if and only if it is necessary to do so. These type of policies are becoming more obtainable now in the United Kingdom and are known as no sum insured policies.

Other Structures - Structures in and a round the home such as fences, tool sheds and benches are usually covered by a 10% limit from your standard home owner policy (i.e. your home is insured for $400000 so structures are covered for $40,000). However, this in many cases, this limit is not high enough and this floater will provide you with the extra cover.

Sewer and Drains - Damage to your storage basement is not usually covered by standard home owner insurance in the event of faulty sewers or drains. It is also not covered by flood Insurance. Sewers and Drains will help cover losses from such an event. Most insurers will apply a limit for this cover so check out the exact amount of coverage on offer.

Inflation Guard - Building costs will increase with inflation over time and the amount of cover under your home owner insurance policy will always remain the same unless you adjust it your self each year to take in to account inflation or you purchase the Inflation guard endorsement. This is fairly similar to an purchasing an index linked policy in the United kingdom.

Assetsure is an Appointed Representative of Intasure, a trading name of Blenheim Park Limited who are authorised and regulated by the Financial Services Authority. Assetsure Limited is an appointed representative of Highhouse Insurance Services Limited who are authorised and regulated by the Financial Services Authority.