Homeowners

Tapley Insurance Agency, Inc. - Insurance - Frequently Asked Questions

Who decides on the type of insurance, the mortgage company or me?

You do. The mortgage company collects a set amount from you each month in order to protect their investment. This money is put in escrow and covers your insurance and taxes. However, the policy is still yours and you might select the insurance you feel offers the best coverage at the best rates.

Can a Bank or Mortgage Company Tell me that I need to carry a certain amount of insurance, even if it exceeds the replacement cost of my home?

No. This is one of the most common questions here in the seacoast sections of Maine and New Hampshire due to the extreme values in waterfront land. In Maine, Title 33 prohibits financial institutions from making the homeowner carry more insurance than what the property would cost to rebuild as is. It is flat out illegal. Where we see problems with this most often is in waterfront homes where the land may be worth $1,000,000 but the home would only cost $250,000 to rebuild. Often the buyer would have a loan of about $750,000 and the mortgage company would tell them that they had to have insurance for the amount of the loan. Here is Title 33 word for word…”No person or financial institution making a residential mortgage loan for one to 4 residential units may, as a condition of the mortgage or as a term of the mortgage deed, require that the mortgagor carry property insurance on the property which is the subject of the mortgage in excess of the replacement cost of any buildings or appurtenances subject to the mortgage.”

What exactly does a Homeowners policy cover?

“Exact” coverage is impossible to define because there are different policies and about 900 insurance companies writing Property/Casualty business in the United States. However, 80% of Homeowners policies are based on a standard form. All Homeowners policies cover two important areas: Property and Liability.

Property insurance covers your structures and possessions. Personal Liability, as its name implies, means you’re legally obligated to pay money to another person for actions caused by you, your family, or your property. That liability extends to medical payments to others for injuries caused by you or your family.

Are floods, earthquakes, and other natural disasters covered?

Most catastrophes are covered. Flood and earthquake damage, however, are not covered by a standard policy and both perils are more common than many people realize. We can advise you on such normally excluded conditions as floods and earthquakes.

Are there exclusions I should know about?

Exclusions listed and defined in your policy might include neglect, intentional loss, “earth movement,” general power failure, and even damage caused by war. If you fail to take care of your property (e.g., a leaky roof), you might not be covered. Obviously, if you intend to lose an object or damage your property, there’s no coverage.

One other exclusion that can be costly is the Ordinance or Law exclusion. Building codes established by governmental bodies that drive up the cost of rebuilding or repairing after a loss occurs might not be covered by your insurance policy. Thus, if you discover when replacing damaged property that current law demands higher grade or more expensive materials than those you’re replacing, the new materials might not be covered fully.