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NJ Home Insurance - FAQs

1. If I put a claim on my home insurance will my rates go up?
  In most cases your premium will NOT increase due to a claim on your homeowner's insurance. However submitting multiple claims in a short period of time may affect the future renewal of your policy.

2. Does my NJ home insurance include protection for damage caused by a flood?

In most cases a flood is NOT covered by your policy. A flood is defined as a rising body of water and its overflowing onto a normally dry area. An example would be extremely heavy rains causing flooding in your basement. In this case your homeowners insurance will not cover the water damage.

However a burst pipe in your home that causes water damage is not considered a flood and therefore coverage would normally apply. If you live in an area of New Jersey that is prone to flooding please consider purchasing flood insurance for your protection.
Click here for a Fast Free No-Obligation NJ Flood insurance quote.

The recent heavy rains of April 2007 left many New Jersey homeowners with flooded basements - in some cases for the first time in memory. While your home insurance will not cover the damage caused flooding due to rainstorms it is worth looking at some steps you can take to help waterproof your basement. These steps include installing french drains and a sump pump. Click the link here for some useful information on how to keep your basement dry

3. I bought my home for $410,000 but my homeowner insurance policy is covering my home for only $280,000. Why?

When insuring your home the formula that is usually used is based on the replacement value of your home and not the market value. The replacement value of your home is the amount of money that would be needed to "replace" the home to it's original state in the event of a full loss. The market value of your home is the value of your home and land.

The market value of your home is the amount you could sell your home for in any current market. Because some of the factors that affect the market value of your home include lot size, home location and market conditions, there is no need to insure the market value of a home. The market value of your home is usually not affected by a claim or loss. For a further explanation, please contact a friendly New Jersey insurance professional with any questions you may have.

4. I purchased my home with a natural gas heating system but my home was built many years ago. Should I be concerned about an in-ground oil tank?

Yes. Even though your home may now be heated with a natural gas heating system, most older New Jersey homes used an oil heat system years ago. It is very important that you check with your local building department to see if there are any records of your home ever having an oil system. Your home could still have an in-ground oil tank. This tank may or may not have been properly filled or removed when it was converted to gas.

An in-ground oil leak or spill can cause an environmental hazard and you may be responsible for the clean up costs associated with this hazard. It is recommended that you have your home inspected by a professional tank inspection service to be sure that a potential in-ground oil tank has been properly removed or closed.

For more information on oil tank removal please refer to this article from the G. Warren Inc. Home Inspection website
Straight Talk About Abandoned In-Ground Oil Tank Removal

5. If I add an extension or addition to my home or if I renovate my home, should I increase my homeowner insurance coverage?

Extensions or Additions
In most cases adding an extension or addition to your home increases the square footage so it is very important that you contact your insurance agent to discuss the changes you have made. By increasing the size of your home you have increased the amount of money it would take to repair or replace your home. Your homeowner insurance policy limits need to be adjusted to reflect the increased size. In many cases the increase in coverage only results in a small increase in premium. There are also ways to increase your coverage limits while keeping your policy premium the same.

Renovations or Upgrades
Renovating or upgrading your home usually does not involve an increase in the home's square footage. However it is still very important to communicate with your insurance agent as the upgrades you made need to be protected properly by your homeowner insurance policy. The materials used to renovate or upgrade your home require extra coverage to protect you properly. This increased coverage in your homeowner insurance policy may only cause a small increase in your annual premium but may save you thousands in the event of a claim.

For more information and expert advice related to your particular situation please submit a free no-obligation homeowners quote.

6. When it comes to home insurance what is the difference between Actual Cash Value and Replacement Value?
  Replacement Cost coverage for your personal property means no reduction is made in your loss for other words, old is replaced with new. An Actual Cash Value policy will only pay what the item is worth based on its value at the time it was lost, damaged or stolen.

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7. How much homeowner insurance coverage do I need?
  With the ever rising cost of building materials and labor it is important to have the proper level of protection on your home insurance. In most cases, a formula is used to calculate the cost per square foot to rebuild your home. For example, a 2000 square foot home at $140.00 per square foot to rebuild would require $280,000 of dwelling coverage (2000 x $140.00 = $280,000). It is always best to contact an insurance professional who will guide you and help you determine the proper coverage for your New Jersey home.

8. Is my jewelry covered under my homeowner insurance policy?
  In most cases, there is a limit on non-scheduled jewelry items on a home insurance policy. Scheduling and endorsing specific items of jewelry onto your homeowner insurance policy is the safest way to properly cover your jewelry. Your homeowner insurance company may ask for an appraisal of the item that you want covered. The jewelry can then be added to the policy for the broadest coverage. This is usually very affordable and you will have the peace of mind knowing that your valuables are covered properly.

9. Why does my homeowner insurance premium usually increase every year?
  Most homeowner insurance policies have a built in inflation protection endorsement which will increase your coverage every renewal to keep up with the rising costs of rebuilding a home. This usually also causes a slight yearly increase in your premium. Remember, the cost of rebuilding a home this year differs from the cost 10 years ago.

10. Aren't all homeowner insurance companies the same?
  Not all homeowner insurance companies offer the same coverage and endorsements. Some homeowner insurance companies include enhancements to their coverage at no extra cost to you. These enhancements can be very important at the time of a claim. Some insurance companies also offer various discounts such as loss free and non-smoker discounts. It is always advisable to shop around and compare homeowner insurance companies to obtain the best coverage for your needs.

11. Will installing an alarm system in my home lower the cost of my homeowner insurance?
  Yes. Most insurance companies will give you a discount on your premium if you install a central station burglar or fire alarm system in your home.

12. My home has an in-ground oil tank. Can I get homeowner insurance?

Although some homeowner insurance companies may offer coverage even if you have an in-ground oil tank, it is becoming increasingly harder to find insurance companies who will insure homes that have in-ground oil tanks.

If your home does have an in-ground oil tank, you should call your homeowner insurance company or agent to determine if your policy will protect you for a claim involving the in-ground tank.

13. What deductible should I choose for my homeowner insurance?
  As with most insurance companies, increasing your deductible will usually lower your annual premium. When you increase your deductible, you are taking on more of the financial responsibility in the event of a claim. This will result in a discount on your NJ home insurance premium.

14. I have added a swimming pool to my home. How will this affect my NJ home insurance?

If you add an above ground or in-ground swimming pool to your home it is recommended that you inform your insurance agent of the addition. Most homeowner insurance policies cover swimming pools at no additional cost to you. Most homeowner insurance policies also protect swimming pools and the liability associated with swimming pools automatically.

It is important that you check with your insurance agent as certain in-ground swimming pools may require additional coverage to properly protect them. Increasing the liability coverage of your homeowner insurance policy costs usually only a few dollars more on an annual basis. This can help protect you for the increased liability exposure associated with owning a swimming pool.

15. What is knob and tube wiring and can it affect my ability to get home insurance?

Many houses built prior to 1950 have a type of electrical wiring known as "knob and tube" wiring. This wiring consists of porcelain insulating tubes that contain wires, whereas modern wiring is usually run through plastic or PVC tubes. These porcelain tubes pass through the beams, rafters and walls of the home and the porcelain knobs are used to carry the wire around corners.

Homeowners with this type of wiring may find it difficult to obtain homeowner insurance because some insurance companies feel that this type of system may cause an increased risk of a fire.

Some insurance companies may require an inspection to show the condition of the coating of the wiring. If the inspection reveals that the coating is in good condition, they may choose to write the policy. If the coating is cracked or deteriorating, the insurance company may choose not to write the policy.

In some cases, older homes have a lower capacity in their wiring systems therefore homeowners should make sure they do not have too many electrical gadgets plugged in. An electrical overload could easily result in a fire. If you home has knob and tube wiring, proper maintenance is the key in keeping your home safe. Where the wire insulation is brittle or cracked, it should be replaced.

Knob and tube wiring does not have a ground wire. It consists of two wires: a "hot" one that carries electricity to it's destination and a "neutral" one that completes the circuit. Modern wiring systems reduce the chances for creating a fire hazard through the use of a grounding wire.

Some insurance companies may also point to the lack of circuit breakers as a potential problem with knob and tube wiring. Having a circuit breaker can help lower the risk for a fire in a home with knob and tube wiring. Any homeowner with knob and tube wiring, or the potential buyer of a home with knob and tube wiring should hire an electrician to give the system a complete check. If an inspection uncovers problems you should make the necessary repairs for personal safety as well as insurance concerns.

16. What is mortgage insurance?

Although there are many different types of mortgage insurance plans, the most common type of mortgage insurance pays a designated beneficiary (usually a spouse) a lump sum of life insurance in the event the homeowner were to pass away. This allows the designated beneficiary to "pay off" the existing balance on the mortgage.

The proceeds on this type of mortgage protection insurance are usually paid tax free to the beneficiary. These plans generally have a level premium and are designated for a specific term such as 20 years or 30 years. They normally are not very expensive and the protection they offer can give peace of mind to homeowners.

17. Homeowner Insurance and falling trees - Am I covered?

Many homeowners at some point will be faced with a circumstance involving a tree or limb that has fallen from heavy winds, a storm or icing conditions. How your homeowner insurance protects you can be a little tricky.

First of all, if there is damage to your property such as a roof, garage, shed or even a swimming pool, your homeowner insurance policy should cover the damage regardless who's property the tree is on. If there is damage from your tree to your property then your homeowner insurance policy should respond. If there is damage to your neighbor's property from a tree that is considered yours, your neighbor's homeowner insurance policy should pay for the damages. If there is damage to both properties (from anyone's tree) then both homeowner insurance policies will be involved and each one should deal with its own property.

The only time that someone else's homeowners insurance policy would pay for damage to your property would be if a liability was involved. For example, if a tree was rotting or leaning and should have been removed or trimmed prior to the damage occurring, then the homeowner insurance policy of the "owner" of the tree could be liable to pay for the damages to your property. If your homeowner insurance policy did cover your property damage that was caused by your neighbor's rotted tree that fell into your yard, your insurance company would then "subrogate" (or collect) the money from the other insurance policy.

Important note: If a tree falls and does not cause any damage to your home or any other property then there is usually no coverage to pay for removal of the tree or for any cleanup. Most insurance companies consider this "An act of God" and therefore there is no coverage.

It is your responsibility to protect your property. Most homeowner insurance policies cover only damage, NOT potential damage. Your homeowner insurance policy will probably not cover the cost of removing or trimming a potentially dangerous tree or limb. Even though the tree or limb could present a hazardous circumstance, it is your responsibility to keep your premises and the surrounding area safe and clean.

If you ignore something like a rotting tree and the tree later falls and causes damage to your neighbor's home, their insurance policy will probably cover their damage. Then their homeowner insurance company will want to recover their money from your insurance company, or you. This again is called subrogation.

On a final note, damage to an automobile from a falling tree or limb is usually not covered by a homeowner insurance policy. Your auto insurance policy would pay for these damages under the comprehensive coverage section of your policy. ( If you maintain only liability coverage on your automobile, then chances are that you do not have comprehensive protection on your auto policy. This is typical of coverage for older vehicles ).

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