This article contains a list of Arizona homeowners insurance FAQ (frequently asked questions). It includes the types of issues that a number of AZ homeowners ask about insurance. FAQ are a great way to find information quickly. If, by chance, your question isn’t answered in the FAQ, buyers of Arizona homeowners insurance can consult their insurer directly.
Why Do I Need Arizona Homeowners Insurance?
You need homeowners insurance to protect your house and your personal property if there is damage. Homeowners insurance also provides coverage if a person is injured while on your property.
How Much Arizona Homeowners Insurance Coverage Do I Need?
If you are carrying a mortgage on the property, your lender may require you buy enough insurance coverage to pay off the mortgage. Not having enough homeowners insurance may mean you are wiped out financially if something were to happen to your home. Make a list of everything you would need to replace if your home was destroyed and buy enough insurance to cover it.
In addition, you need insurance coverage to protect you if someone is injured while on your property due to your (alleged) negligence. If a visitor to your property is seriously injured, their medical bills will accumulate quickly and most people don’t have the funds available to pay them out of their own pocket.
It makes sense to buy Arizona homeowners insurance. These FAQ are here to help you make good decisions about insurance.
Do I Have to Buy Homeowners Insurance From The Company My Lender Suggests?
This is an important insurance FAQ for Arizona homeowners. You can buy your homeowners insurance from any company you choose. Simply advise the lender when you have arranged coverage and which company holds the policy.
What Basic Arizona Homeowners Insurance Coverage Options Should I Be Looking At?
Here are the basic items your homeowners insurance policy should cover:
Property Damage: Damage to property includes the following conditions that cause a loss:
- Fire
- Theft
- Vandalism
- Hail or Windstorm
- Lightning
If you want coverage against damage caused by earthquakes or floods, you will need to add it separately to your insurance policy in the form of an endorsement or rider.
Don’t assume that you are covered for all types of loss; ask your agent or contact your insurance company directly to make sure that you understand the terms of the policy. The aftermath of a loss is not the time to find out that you didn’t have the right amount or type of insurance coverage.
Personal Property: You can think of personal property insurance in this way: Your property damage insurance covers losses to the structure of your home. The personal property provisions cover your home’s contents. This would include:
- Furniture
- Appliances
- Flooring
- Clothing
- Books and Toys
- Electronic Equipment (Computers, Stereos, Televisions)
Your personal property may be covered up to a certain limit in your policy, but be sure to ask exactly what level of coverage you have. If you have expensive items in your home, such as jewelry, furs, or cameras, you may need to buy additional coverage to protect them. Your insurance agent can advise you about the best course of action to make sure that all of your personal property is protected from loss.
You also need to understand the difference between cash value and full replacement value. The cash value is the cost of the item, less depreciation. This means that if you bought something for $500.00 and it has depreciated to a value of $300 over time, the insurer will give you $300 for the item. Full replacement value means that the insurer will pay to replace the items lost at current prices. Using the same example, if the item you need to replace is now worth $300 due to depreciation but a new one costs $600, then the insurance company will allow you $600 for that item.
Additional Living Expenses: Imagine for a moment that your home has been damaged by fire or some other event and you are unable to live there while it is being repaired or that you have been told to leave your home under a government order. If you have additional living expenses coverage as part of your homeowners insurance, the insurer will pay reasonable living expenses while your home is being repaired or until you are able to return to your dwelling.
Reasonable living expenses could include:
- Cost of staying in a motel or other accommodation
- Meals
- Storage costs for your personal property during repairs
The idea here is for the insurer to provide funds so that the family can maintain its usual standard of living, not to check into the most expensive hotel in town and order room service for every meal. Check with your insurer to make sure that you understand what the policy limits for additional living expenses are; there may be a daily maximum for expenses or a lump sum limit for this coverage.
Medical Payments Insurance: This coverage covers the cost of medical treatment for someone who is injured while on your property. In this case, “property” includes the sidewalk around your property and the alley (if your property is next to one). This does not cover injuries you or a family member may sustain while at home, though.
It’s not a good idea to skimp on the medical payments insurance coverage. Medical expenses can add up very quickly, especially in the case of a serious injury requiring hospital treatment. Keep in mind that any expenses over and above your policy limit will need to be paid by you.
Personal Liability Insurance: Personal liability insurance covers you if someone (other than yourself or a family member) is injured due to your negligence and you are sued for damages. If the injury results from a deliberate act, then you won’t be covered. The insurer will retain an attorney on your behalf and cover the cost of the attorney’s fees.
How High Should My Deductible Be?
As a general rule, you should have your deductible set at the highest level you can afford. If you do have to make a claim, you will have to pay the deductible out of your own pocket. Setting the deductible at $250 or $500 means that your premiums will be lower than if you have a $100 deductible. If paying the higher deductible would cause financial hardship for you, then of course choose a lower deductible amount.
What Do I Do If My Insurance Company Refuses To Renew My Policy?
Typically, an insurance company is not obligated to renew your policy from year to year (although all insurance companies selling home insurance in Arizona must comply with the regulations set forth by the Arizona Department of Insurance – for specific details use our free quote tool at the top of the page to consult with a local insurance agent). If you have made a number of claims against your homeowners insurance policy, then they may conclude that you are too big of a risk for them to continue to insure.
If you receive a notice indicating that they will not renew your coverage (and you are happy with your insurer), you do have options:
- Ask your insurer if they will continue to cover you if you increase the amount of your deductible. (This means that you are less likely to be making claims in the future).
- Shop around for another insurer who is willing to offer you coverage.
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Hopefully, you have found these Arizona homeowners insurance FAQ helpful.
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