Homeowners Insurance for Seniors
Your home is probably your biggest investment, so you want
to make sure it is protected. Typical homeowners insurance covers losses or
damage to your house and its contents caused by fire, weather, vandalism and
theft, the costs of additional living expenses if you can’t stay in your home,
and provides personal liability coverage and medical payments if someone is
injured on your property.
Homeowners insurance is not mandatory under state law, but
most mortgages require you to have insurance. If your mortgage is paid off, you
may not be required to insure your home, but it’s still a good idea. Homeowners
insurance is sold through private insurance companies and agents.
How much insurance should you have? That’s up to you, but
the National Association of Insurance Commissioners recommends you insure your
home to replacement cost value, or what it would cost to replace or rebuild
your home or repair damages with materials of similar kind and quality without
deducting for depreciation.
It’s important to note that some things aren’t covered under
standard homeowners’ policies. These
include floods, sinkholes, mine subsidence, and earthquakes. If these are concerns where you live, you may
want to look into buying specific coverages for these issues.
Flood insurance is provided both through the National Flood
Insurance Program (NFIP) that is run by the Federal Emergency Management Agency
(FEMA) and by an increasing number of private insurance companies. Flood
insurance rates for NFIP have risen quite a bit in recent years. This is
because the NFIP sold policies at low rates subsidized by the federal
government. Recent disasters,
particularly Hurricane Katrina and Superstorm Sandy, caused this federal
program to go deeply in debt, so Congress then passed laws requiring flood
insurance rates to more closely match what this coverage would cost on the open
market. You may want to check out private flood insurance options because these
options may be more competitively priced. If you have a mortgage, make sure
your lender will accept private flood insurance before buying it.
FEMA has also redrawn its flood zone maps, putting some
properties in flood zones that were not previously designated as such. If you
have a mortgage backed by the federal government, you probably will be required
to have flood insurance if you are in a flood zone. More information about
flood insurance is available at www.floodsmart.gov.
If you think your home may be at risk for occurrences such
as earthquakes, mine subsidence, or sinkholes, you should discuss this
additional coverage with your insurance professional. Be aware that the
Pennsylvania Insurance Department issued a notice in April 2015 saying that
homeowners’ insurance policies with earthquake endorsements denying coverage
when the earthquake is not “naturally occurring” are not permissible. If you
are presented with such a policy, do not sign it, and report the incident to
the department’s Consumer Services Bureau online or call the consumer hotline