You and your family probably spend a considerable amount of time in your home, playing in the backyard and driving to school or work in your car. Your house and automobile are two of the most valuable purchases you’ve made, and it makes sense that you want to protect your home and automobile with insurance coverage.

What Is Home and Auto Insurance?

Home and auto insurance protects you from large expenses resulting from loss, damage and injury associated with your home, property and automobile. The two types of insurance—homeowners and automobile—are separate products but are frequently bundled, or purchased together, which usually results in a discounted rate. Bahamian regulations mandate a minimum amount of auto insurance, and many mortgage lenders require homeowners insurance (with catastrophic or hurricane coverage) if you want to borrow from them.

Despite the necessity of having it, insurance can seem complicated and expensive. Homeowners insurance may offer the following:

Dwelling coverage — covers repairing or rebuilding after damage to the structure, including built-in appliances, plumbing and wall-to-wall carpeting

Other structures coverage — Covers other buildings on the property such as a garage, shed or gazebo

Personal liability — covers injury or damage to others and their property if you are held responsible; for example, medical bills for someone injured on your property

Contents or personal property coverage — covers clothes, furniture, electronics and other items in your home if damaged or lost due to a covered cause

Loss of use coverage — covers living expenses in the event of a covered loss (such as temporary housing after a house fire)

Homeowners plans typically list covered damages and losses in either an “open perils” or a “named perils” policy. An open perils policy will cover any damages not specifically excluded, whereas a named perils policy will list the damages and losses that are eligible for coverage.

Often, you can add extra coverage to the base plan as long as you are willing to pay a higher premium. For example, many plans will include minimal coverage for items such as jewelry and furs, but you may be able to purchase extra “All Risks” coverage. Likewise, damages caused by hurricane or “catastrophic” damage, are typically not included in standard coverage but can be added at an additional cost.

Auto insurance may offer the following:

Bodily injury and property damage liability coverage — covers expenses when you are legally responsible, including damages and medical bills as well as defense and court costs in case of a lawsuit

Medical payments and personal injury protection (PIP) coverage— covers medical expenses for you and possibly passengers following a car accident

Comprehensive coverage— covers damage from events such as fire, theft and vandalism

Collision coverage— covers damage after a collision with other vehicles or objects

Replacement cost coverage— covers the replacement value of a severely damaged car rather than the lesser, depreciated value

Other items such as towing or emergency roadside services coverage can also be added to your policy depending on the insurance company offerings.

How Does Home and Auto Insurance Work?

When submitting a claim, do so as soon as possible because many policies have a time limit for claim submission. Depending on what the claim is for, make sure you keep any police reports for a theft or car accident, retain receipts for everything and take photographs of damages.

Generally, your plan will have a deductible to meet, which is the amount you are responsible for before the insurance company will pay. For example, if your car suffers covered damages that require $1,200 in repairs, and your auto policy has a deductible of $500, you will be reimbursed for the $700 that it cost after you met your deductible. Additionally, your insurance plan may have a “split limit,” meaning different parts of your coverage are subject to separate deductibles and maximums. An example of this is with homeowners insurance which may have no deductible for fire damage, but a deductible of 2% of the Sum Insurance for Hurricane damage.

When insuring your home, make sure you insure it for the FULL replacement value. Use the square footage of your home as a guide, then multiple it by the going rate of construction for you home. For instance, if your home is 1500 square feet and it is estimated that it would cost $175 per square foot to rebuild your home you need to insure your home for 1500 x $175= $262,500. If you insure your home for less than its replacement value, you will be considered to be underinsured and the condition of Average will apply.

For property that is underinsurance, Average works by applying the same proportion to your claim as the value of the underinsurance. For instance, if you insured the above home for $200,000 instead of the full replacement value of $262,500, you would be considered to be covering only 76% of your claims. ($200,000/$262,500). Therefore you would get only 76% of any claim amount that you submit.

For assistance with Auto or Home insurance, call on Lampkin, Knowles & Company!