Homebuyers, especially first-time homebuyers, can be confused by all the options available when shopping for home insurance policies. The scope and purpose of each home insurance policy vary with each separate property, and coverages, premiums, and exclusions are as different and individual as is each purchaser. Understanding the potential risks and liabilities that exist in your Oregon home, and how the home insurance industry works to protect you from those, are critical factors to ensure that you select the exact right policy for your property.
What Is The Fundamental Purpose of Homeowners Insurance?
According to a 2013 study, 60 percent of American homeowners underinsure their homes so their coverage never meets its basic purpose. At the very least, a home insurance policy should cover the cost to repair damages to structures on your property, including the homes, sheds or other outbuildings, caused by circumstances (usually) out of your control. Many basic policies also cover damages to or losses of your personal property and provide liability coverage if an injury happens to someone who is on your property. The insurance acts as a barrier to the potentially devastating loss you would suffer if you had no financial capacity to make repairs to your property or amends to an injured party after a disaster has struck.
The challenge faced by most insurance purchasers is setting the value of the coverage. You secure your insurance coverage by making periodic payments, called “premiums.” The value of the insurance is matched by the value of the premium, so high premiums offer (usually) better coverage than do lower premiums. However, the price you set for your premium is also affected by the level of risk that you and your home present to the insurer.
Can Location Affect Risk Level?
Modestly designed and built houses located in stable communities, with few or no environmental concerns will cost less to insure. However, much of the beauty of Oregon is its dramatic geography and many Oregon homes are built close to cliffs, in flood zones or in areas where other topography or weather-related anomalies can cause damage. Coverage for damage caused by these circumstances often requires higher premiums than that required for basic coverage. Sometimes the insurer will exclude those risks from coverage altogether, leaving the homeowner with no financial assistance with which make repairs for damage caused by those riskier factors.
Repair or Replace? Full or Partial Options also Affect Premium Level
The “repair or replace” option usually relates to damaged personal property, but can sometimes relate to structural damage to the home itself. Often, repairing an existing asset is less expensive than replacing the asset completely. The insurance premium set to restore property is most often cheaper than one that covers its full replacement. Most Oregon home insurers allow you to set your premium at a level that you can afford, which often requires you to choose between repair or replacement options. You can also shift the terms of the policy to achieve a comfortable “affordability” level by limiting the scope of the structural coverage to cover a limited (partial) number of risk factors. Note that whatever risks you do not cover will not be covered if your home suffers damages caused by one of those factors.
What Are Traditionally Excluded Risks?
There are a few types of risks that most homeowners insurance policies intentionally do not cover. Considered “Acts of God” by the insurance industry, insurers choose not to cover losses caused by floods, earthquakes or landslides within their standard home coverages. Oregon’s fairly heavy rainfall has caused floods and landslides all across the state. Earthquakes are rare, but they do happen, and experts predict that the state will experience a big earthquake in the near future. For an additional premium amount, additional coverage is often available for homes are located in areas where these threats occur. However, not all insurers will cover these risks so it may be necessary to obtain a separate insurance policy specifically for them from a different insurance carrier. Flood insurance is only available through the National Flood Insurance Program. Insurance against damages caused by earth movement – landslides or earthquakes – is often difficult to find, so your agent may have to look around to find it for you if your home is in an area where those events might occur. Oregon’s high rainfall levels also impacts insurance coverage for backed up drains and sewers. For homeowners insurance Oregon policies do not cover damage caused by these incidents so you may elect to get separate coverage if it is possible that these events might occur in your home.
Are Liabilities Different From Losses?
If you ever have guests in your home, you can be held liable for injuries they may suffer while they are there. Most often, “fault” is not a factor in determining a homeowner’s liability for a guest injury; injuries can happen when people slip off a perfectly safe step, for example, and in fact, injuries  caused by slips and falls make up a high percentage of homeowner insurance claims. When these injuries occur, typically the liability portion of your policy covers the medical costs incurred to treat the injury.
Can Insurers Deny Coverage In Certain Circumstances?
To keep insurance coverage in full force, insurance companies require that their “insureds” (insured people) keep their homes and land free of dangerous conditions that could cause damage or injuries. If, however, the homeowner has failed to adequately maintain the property, and has left exposed a dangerous condition that contributed to the injury, then the insurance company may decline to cover the costs of the damage caused by that condition. Claims can be denied in whole or in part, depending on the circumstance of the incident, and it often takes months to determine the exact causes of the injury before acceptance of the claim happens. Note, also, that insurance coverage doesn’t act as a shield to lawsuits filed by injured guests. In Oregon, your best practice is to keep your home and property free of circumstances that might cause injuries.
Buying your first home is a fun and exciting process. Living in that new home worry-free sweetens the experience. Proper insurance protects your Oregon home and your valuables if or when something goes wrong.
2 Point Highlight
Understanding the potential risks and liabilities that exist in your home, and how the home insurance industry works to protect you from those, are critical factors to ensure that you select the exact right policy for your property.
There are a few types of risks that most homeowner’s insurance policies intentionally do not cover.
