North Carolina Homeowners Insurance FAQs
The homeowners market in North Carolina primarily references six types of homeowners policies. Four of the six are normally purchased to handle single family dwellings while the remaining two are normally purchased for coverage on an apartment or condominium.
Click here for details on the four policies that cover single family dwellings.
The homeowners policy contains two sections. Section I provides property coverages (A, B, C and D) while Section II provides liability coverages (E and F).
Coverage A – Dwelling
Coverage B – Other Structures
Coverage C – Personal Property
Coverage D – Loss of Use
Coverage E – Personal Liability
Coverage F – Medical Payments to Others
Click here for the detailed description of each.
This coverage will help with additional living expenses if your home is damaged by a peril insured against to the extent that you cannot live in your home. These expenses include, but are not limited to, housing, meals and warehouse storage.
It is important to note that your company will only pay those additional expenses above and beyond your normal and customary living expenses. Coverage D is normally limited to 20 percent of Coverage A.
You must keep receipts for all additional living expenses and submit them to your company for reimbursement consideration. All of the exclusions, conditions and specific language can be found in your policy.
Click here for more on how insurance will pay for loss of use of your home.
Ask your agent for more information on this coverage.
Actual Cash Value (ACV): The cost it would take to replace an item, minus depreciation
Replacement Cost (RC): The cost it would take to replace an item.
Most homeowners insurance policies cover the contents of your home (i.e., personal
belongings) on an Actual Cash Value (ACV) basis. Many insurers offer an option of insuring
personal property at replacement cost using the HO 04 90 endorsement. The premium
will be slightly higher for this coverage; however, you may want to consider the option.
For example, if you selected ACV coverage and bought a new television in 2001 for $700
and lightening destroys that television in 2008, your insurance will not pay the full $700.
It will pay a lower figure that reflects the televisions current value, let’s say $350. If you
selected replacement cost, however, and the same television now costs $900, you will
initially receive the ACV for the TV ($350). If and when you replace the television, you
should provide your insurance company with a receipt of purchase for their consideration
of paying the balance ($550). Your insurer will require proof of purchase for full
reimbursement consideration.
Whether your property is insured for replacement cost or actual cash value, it is important
to keep track of its value. Check with your agent or insurance company on an annual basis
to make sure your property is adequately insured.
Standard homeowners insurance usually covers unexpected and unintentional water damage caused by issues within the home, such as a burst pipe. However, most policies do not cover water damage caused by sewer backups, drain overflow, or sump pump failure. To fill this coverage gap, you can add a water backup endorsement to your homeowners policy.
Companies offer varying amounts of water backup protection, typically ranging from $5,000 to $25,000. When deciding on coverage, consider the cost of replacing everything at risk of damage in a worst-case scenario of drain backup or sump pump overflow. This includes flooring, furniture, personal belongings, and anything susceptible to damage from a sewer or drain backup.
Ask your agent for more information on this coverage.
Ordinance or law coverage is an endorsement to a property policy, including homeowners, that pays for the extra expense of rebuilding to comply with ordinances or laws, often building codes, that did not exist when the building was originally built.
Your city, county, and state has rules called building codes. These rules make sure that buildings are safe for everyone. Building codes can change over time to include new things like better plumbing, wiring, and HVAC systems, as well as upgrades to make structures resistant to fire and bad weather. If your home gets damaged and needs repairs, the building code might say that you have to fix it according to the new rules. This could mean rebuilding part or all of your house. Sometimes, homeowners insurance doesn’t cover the extra costs of meeting the building code. That’s when ordinance or law coverage can help.
Ask your agent for more information on this coverage.
This endorsement protects the contents of freezers and refrigerators if the power goes out. It covers interruption of electrical service and mechanical failure. In North Carolina the maximum amount paid is $500 and a special deductible applies to this coverage. The insurer will pay only the amount that exceeds $100 of covered losses.
Ask your agent for more information on this coverage.
Loss assessment coverage is an optional add-on to your homeowners or condo insurance policy. It offers protection if you live in a shared community, such as a condo or homeowners association (HOA), where you are responsible for a portion of damage or loss in a common area.
Homeowners or condo association members pay fees for services and amenities in their shared community. These fees contribute to a community HOA insurance policy, also called a “master policy.”
The master policy helps cover losses in shared areas, up to certain limits. If the master policy doesn’t fully cover a claim, members of the homeowners association may need to pay a portion of the remaining amount. They may also need to pay if there’s no insurance coverage from the association for a specific loss.
If you’re a property owner in a shared community, a loss assessment can help pay for liability costs, medical expenses, or property damage. You can count on this endorsement to help pay for these, if damages to shared areas exceed your HOA’s master policy limits.
Ask your agent for more information on this coverage.
It should really should be called personal offense coverage
Your home insurance plays a crucial role in providing financial protection against unexpected incidents that may occur both at your home and when you’re away from it. However, it’s important to note that personal offense coverage is not typically included in a standard homeowners policy. Instead, it is an additional coverage option that you can add to your insurance policy to help safeguard yourself against personal offense allegations.
While personal injury may sound like an injury that occurs to either you or another person, it’s important to distinguish personal offense coverage from bodily injury or personal liability insurance. Bodily injury or personal liability insurance primarily covers expenses such as medical bills and legal fees in the event that a guest is injured while on your property. On the other hand, personal offense coverage addresses a distinct aspect of protection.
Personal offense coverage goes beyond physical injuries and focuses on providing financial support and protection in situations related to personal offense allegations. These allegations can encompass a variety of non-physical harm, such as defamation, slander, invasion of privacy, or even false arrest. When faced with such allegations, personal offense coverage can help cover legal expenses, including attorney fees, court costs, and settlements or judgments that may arise from these claims.
By acquiring personal offense coverage as part of your homeowners insurance, you can have an added layer of protection against unforeseen circumstances where personal harm, reputation, or privacy is at stake. It is essential to review your insurance policy carefully and consult with your insurance provider to understand the specific terms, conditions, and limitations of the personal offense coverage you may choose to purchase.
Remember, insurance is designed to provide peace of mind, and by considering additional coverage options like personal offense protection, you can enhance the level of financial security and minimize potential risks in various aspects of your life.
Personal offense insurance covers things like:
- Libel
- Slander
- False arrest
- Malicious prosecution
- Wrongful eviction
- Wrongful entry
- Associated legal costs
Ask your agent for more information on this coverage.
*Source: North Carolina Consumers Guide To Homeowners Insurance
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