Homeowners Insurance: Laws and lessons (Part 1)

A surprising (but perhaps not) analysis of homeowner's insurance and why some coverages may not be needed. Get the best coverage for the least money.

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Fairfax County firemen extinguishing a fire engulfing a northern Virginia home. (Fairfax County Fire Dept. photo)

WASHINGTON, August 13, 2017 – Life is full of fun and bumps along the way. When one of these bumps happens in your castle, do you know the answer to that all-important question, “What is covered, and am I protected?” How about, for example:

  • A flooded basement?
  • A tree falling on your house?
  • A guest trips and breaks a leg in your living room?

Let us begin with a basic “Homeowners Insurance 101” lesson, which will illustrate the basic structure of this important and necessary insurance coverage.

Homeowners insurance policies provide you with the following protections:

Coverage A is dwelling coverage. This coverage does not include the land your home sits on. It covers the brick and mortar elements of your home itself and the things that are permanently attached to your home. Any damage to the interior or exterior structure of your home is generally covered under this section.


Lesson: You are likely paying way too much for this coverage, probably because your mortgage company wanted you to have coverage in at least the same amount of your home loan. Suppose your home cost $400,000 and your mortgage was $350,000. Twelve years later a fire burns your house to the ground. It costs $175,000 to rebuild your house. Yet, you were paying premiums on $350,000 of coverage for those twelve years. That could amount to thousands of dollars over time. Even worse, you may have been paying for an “inflation rider” all that time, increasing your coverage amount each year, and thus adding to the premium you had been paying. But your insurance company is going to pay $175,000, your home’s replacement value. They are not going to pay off your mortgage.

Action step: Call your homeowners insurance agent and reduce the coverage to the “replacement cost new” of your home, plus maybe a little more to be safe. How do you find out the replacement cost? Your annual home real estate tax bill from your city or county will tell you the value of your land and the value of your structure. Your insurance company can run an estimate as well if you ask to reevaluate the replacement cost of your home.

Coverage B is other structures coverage. This is coverage for a shed, a detached garage, a pool house. As for the swimming pool itself, that is sometimes debatable. Again, damage to or destruction of these other structures is protected, up to the actual replacement cost and limits of your policy. This is typically 10 – 20 percent of your dwelling coverage amount.

Coverage C is the personal property coverage. This coverage protects against theft and damage to things in your home, such as electronics, furniture, clothing and appliances. This coverage typically includes limited protection for art, jewelry, cash, firearms, precious stones and other named items. It also covers things inside chests and dressers, and many people overlook these items if and when it is time to make a claim.

Action step: Schedule your important things; meaning, literally, make a list of all your art, all your jewelry, and all your expensive clothing. Even better than a list with prices you paid for these things: also take photos or videos of these items. Getting these things included, or “scheduled” will extend the coverage amount of each item as well as what perils will be covered. This means, literally, if you lose your expensive watch it will be covered. Ask your agent how to cover all of your important things that are not normally covered with the standard policy language. Yes, this will cost you a bit more, but it is really pennies and absolutely worth getting better coverage.

Coverage D is loss of use coverage. Remember the example about your house burning down? You get benefits from Coverage D in the event your home is destroyed or severely damaged. You get to be reimbursed for the cost of a hotel, or another home rental, until your house is rebuilt or repaired. You also get some amount for meals, because it is understood that now that you do not have your kitchen where you can save money by making most meals yourself, dining out costs more. You get some compensation for additional costs of commuting if your drive to and from work is farther than when you lived in your now-destroyed home.

Finally, you get a “we are sorry this happened to you” letter from your insurer. No, not really… just seeing if you were paying attention. Actually, some insurers do send this type of letter.

Action step: Do the research on your prior costs for meals and for commuting. Record the new expenses for these items.

Coverage E is personal liability coverage. It protects you if a guest in your home is injured.

Lesson: You should get high limits on Coverage E. It is typically very cheap compared to your other coverages. In most cases, an extra $500,000 of coverage may only cost an additional one to two dollars per month. In situations where the injured person is really injured badly (we all know how expensive medical bills can be), your medical payments coverage is not going to mean much. But your personal liability coverage could be very important to protect you.

Action step: Increase or maximize this limit! You can get hundreds of thousands of dollars in liability for pennies on the dollar. Usually, one million dollars is the maximum limit.

Coverage F is medical expenses to others. It provides a minimum amount to pay medical bills for someone – not for you or your family members – who are injured in your home. This compensation to them might be anywhere from one to five thousand dollars. It is available regardless of whether you or your family were somehow at fault, or if your guest was just clumsy and you had nothing to do with his or her injury.

Action step: Minimize your Coverage F on your homeowner’s policy and use the savings to increase your personal liability coverage. What did he say? Think about it. If someone is injured in your home through no fault of yours, you really “owe” them nothing. By inviting them into your home, you are not a guarantor of their safety no matter what. This is true particularly if your guest caused his or her own injury. Regardless, if it’s your fault and there is not enough of coverage F to pay their bills, your personal liability (coverage E) will pay the rest.

Example for adjusting Coverage E and Coverage F:

Joe has $300,000 of personal liability and $5,000 of medical payments on his homeowner’s insurance policy. If Joe reduced his medical payments coverage to $1,000 and increased his liability coverage to $500,000, he would increase his total coverage by almost $200,000 and in most cases it would cost less than one dollar more per month.

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In closing, thanks are provided to Tony Iannarelli, a very honest and dedicated-to-his-clients insurance agent in Fairfax, Virginia, who educated me and proofread this article.

Stay tuned for Part II on this topic, where questions concerning perils such as lightning, hail, floods, storms, vermin and other pests, and others such as water damage are discussed. Also: What are the insurance concerns about renters in your home?

Do not pass GO, do not (yet) collect $200. But definitely save your Monopoly game.

Paul A. Samakow is an attorney licensed in Maryland and Virginia, and has been practicing since 1980.  He represents injury victims and routinely battles insurance companies and big businesses that will not accept full responsibility for the harms and losses they cause. He can be reached at any time by calling 1-866-SAMAKOW (1-866-726-2569), via email, or through his website

His book “The 8 Critical Things Your Auto Accident Attorney Won’t Tell You” can be instantly downloaded, for free, on his website: http://www.samakowlaw.com/book.

Samakow has now also started a small business consulting firm. The website for this business is brand new and Mr. Samakow will be most appreciative of any and all comments. www.thebusinessanswer.com.

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