FAQs
Homeowner FAQ | Auto FAQ
1.) I am confused about the amount of homeowner insurance coverage I should buy for my home. How much is enough?
Most people find that "enough" means a sufficient amount to rebuild their home. Remember that the foundation and the land are not covered under the policy and therefore will not figure into an insurance settlement. When determining the replacement cost of your home do not use the sale price, the tax assessment or the value the mortgage company calculated. All these can vary greatly from the construction costs. Also, if your home is non-standard, such as a home with unique features including ornate or hand-carved woodwork, stained glass windows, etc., make sure you bring this to your agent’s attention. These are considerations that might not be addressed in a standard homeowners’ policy replacement valuation, unless you bring it to your agent’s attention prior to the underwriting of the policy. If you don’t, you may discover you are underinsured when you have a claim. You should also evaluate your personal belongings and ask your agent about the options for covering these items. Finally, most homeowners’ policies include personal liability protection. Be sure to speak with your agent concerning your liability coverage needs.
2.) What is the difference between ‘actual cash value’, replacement cost’ and ‘modified or functional replacement cost’?
Replacement Cost is the amount to repair or replace the damaged property using materials of like kind and quality, without deduction for depreciation. Depreciation is the loss of value that develops as an item ages or wears. Actual Cash Value is the replacement cost of an item, less the amount for depreciation. A new option available to consumers is modified or functional replacement cost. At the time of a loss, modified replacement cost will restore the home to a functional condition. This may mean that unique features in your home prior to a loss will be replaced with items that serve the same function, but are not aesthetically the same.
3.) My homeowners policy contains coverage for specific (scheduled) items. What happens at the time of a loss?
In most cases, insurance companies have the option to replace the item, if possible, through their vendor of choice. They do this because they generally can replace your item at less cost because of their ongoing business relationship with a specific vendor. Should you decide not to replace the item, your insurer may pay you only the amount that they would have spent to replace the item through their vendor. Fine art items are generally covered for the scheduled amount in the policy.
4.) My insurance company just notified me that they are not renewing my policy. Can they do this and are they required to send me a non-renewal notice by certified mail?
Under Massachusetts law, an insurer is not required to write or renew your policy. However, if your insurer decides not to renew your policy, they must notify you of their decision at least 45 days prior to the policy’s expiration date. Your insurance company does not have to send you a notice by certified mail. They are only required to use first-class mail to the address listed on your policy.
5.) My insurance company did not renew my policy. Where else could I purchase insurance?
You have several options if your insurance is not renewed. First, you can check with your agent to see if he/she writes homeowners policies for other carriers. Second, you can inquire about obtaining insurance through the Massachusetts Property Insurance Underwriting Association (FAIR PLAN). It makes insurance protection available to individuals who are having difficulty getting insurance for their home. You can contact the FAIR PLAN directly. Their phone number is (617) 723-3800 or 1-800-392-6108.
6.) My home sustained a water loss last winter due to melting ice dams on the roof. What would be covered under my homeowners policy?
Generally damage to both the exterior and interior of a home resulting from weight of ice and snow or ice dams is covered under a homeowners policy. However, only the area damaged in the loss will be covered. Further damage sustained due to wear and tear or neglect will not be covered.
7.) My home was recently broken into and I do not have sales receipts for the stolen items. What will the insurance company accept for proof of ownership?
If the actual receipts are not available, insurance companies generally will accept photos, warranties, owners manuals, cancelled checks, credit card receipts, bills, servicing agreements, even video tapes, as proof of ownership. We suggest that you consider video taping your home before a loss.
8.) When can an insurance company cancel my homeowners coverage during the policy term?
According to Massachusetts General Laws Chapter 175, Section 99 (12), your policy can be cancelled for these reasons:
- Non-payment of premium;
- Material misrepresentation/Fraud;
- Conviction of a crime arising out of acts increasing the hazard insured against. (For example, conviction for illegal storage of fireworks);
- Discovery of willful or reckless acts or omissions by the insured increasing the hazard insured against. (For example, not getting a gas leak fixed);
- Physical changes in the property insured which result in the property becoming uninsurable. (For example, should the home become vacant for more that 60 consecutive days, there is automatically assumed to be a greater exposure to vandalism and damage); and
- A determination by the Commissioner of Insurance that continuation of the policy would place the insurance company in violation of the law.
9.) I have specifically insured antique items listed on my homeowners policy. If I have a loss, would the insurance company pay me their insured value?
Your insurance company would first confirm the value of the items with one or more independent antique dealers. You should then be paid a dollar value based on the dealer(s) estimate of the worth of the antique items. If you disagree with the settlement offered by your insurer, then you can follow the dispute resolution process outlined in your policy. There is a simpler way. Get appraisals and have your agent establish the stated values in the policy. You should also keep your appraisals up-to-date.
10.) During a storm, a tree from my neighbor’s yard fell and destroyed my fence. Does my homeowners policy pay for the damage or does my neighbor’s policy?
Generally, your own policy should cover the loss. Your insurance company may be able to recover the amount it pays you for the loss and your deductible from the homeowners insurance that your neighbor may have, in the event that the loss occurred as a result of your neighbor’s negligence.
11.) Recent rainstorms have flooded and damaged my basement. Is there any coverage for this under my homeowners policy?
Flood coverage is generally excluded on the basic homeowners policy. However, some homeowners policies provide coverage for backup of sewers and drains that cause flooding in your basement. This coverage can be purchased for a nominal premium. You should check with your agent to see if this coverage is provided and how much it costs.
If, however, you live in a flood-prone area, you should consider and may be required by your lending institution, to purchase a flood insurance policy. Your agent should be able to inform you about the Federal Flood Insurance Plan and the exclusions and limitations of coverage in this policy.
12.) The food in my freezer went bad because I lost power in my home. Does my homeowners policy provide coverage for this?
The basic homeowner policy usually does not. However, this is a popular coverage for insurance companies to offer and you may be able to buy it for a nominal additional premium. There is also the issue of where the power was lost. Some policies are limited to coverage for electricity lost in the home or where the electricity enters the home. Others will limit it to within so many yards from the home. Your agent should be able to tell you about the availability of coverage and how much it would cost.
This information was compiled to help consumers answer some of the most frequently asked questions about homeowners insurance. Additional questions or comments should be made to the Division of Insurance.
13.) Insurers will not offer me coverage because I have a dog of a particular breed. Can they do this?
Insurers may decide to non-renew your policy or decline offering a policy as long as they do not base their decision on specific criteria outlined in our insurance laws (M.G.L. Ch. 175, section 4C). The underwriting guidelines of homeowner insurers vary from company to company and, as a result, insurers may view the liability your dog and other risks on your property pose differently. Some insurers may offer you coverage, but exclude liability coverage for any claims resulting from dog bite incidents.
As a dog and homeowner there are ways that you can show your insurance agent or prospective insurer that you've taken steps to mitigate any liability risk your dog may pose.
- Show the agent or prospective insurer that your dog has undergone obedience training with a certified trainer.
- Show veterinary records that verify your dog has had all required immunizations and whether it has been spayed or neutered.
- Show photographs as proof that your dog can be contained from contact with visitors to your property (muzzle, dog run, fence, or kennel).
- Ask a trusted neighbor or regular visitor to your property to attest to the obedience of the dog in the presence of visitors.
- If your dog has bitten before, always disclose the nature of the incident and the steps you took to prevent a repeat occurrence.
Remember, taking these steps does not guarantee that you will receive coverage, but providing this information will be important to the insurer in making an underwriting decision. To save you time and frustration in your search for coverage, ask your agent or insurer to be up front about the breeds of dogs the insurer considers a high risk. Again, not every insurer views this issue the same way.
If You Still Cannot Obtain Homeowners Insurance
The Massachusetts Property Insurance Underwriting Association (a.k.a. The FAIR Plan) will offer homeowner insurance to consumers who have been declined coverage in the voluntary insurance market. However, The Fair Plan will exclude liability coverage for claims resulting from any dog with a bite history, but not for specific breeds. More information on obtaining homeowners insurance through The FAIR Plan is available by calling (800) 392-6108.
1.) Are there any specific time limits for an insurance company to pay for collision or comprehensive claims?
There are no specific time limits for the settlement of claims. Insurance companies are required by law to pay all claims in a prompt and reasonable amount of time. However, what constitutes "prompt and reasonable" may vary from claim to claim. Claims that require special or extended investigation may take longer to resolve. Inclement weather conditions often cause an increase in the number of claims filed and that can slow the process down as well.
2.) My auto was declared a total loss following an accident. Is my company required to give me the replacement cost?
When your auto is declared a total loss, your insurance company will only pay you the actual cash value of the auto as of the date of the loss, not the cost to replace it. Your auto's value is determined by the following factors: the retail value for an auto of like kind and quality prior to the accident; the price paid for the auto plus the value of prior improvements to the auto at the time of the accident; the decrease in value of the auto resulting from prior unrelated damage which is detected by the appraiser or for which a claim has been paid; and the actual purchase cost of an available auto of like kind and quality.
If your auto has substantial value because of its exceptional condition such as an antique, classic, or restored auto, you should have it appraised and then insure it for the appraised value.
3.) Do I have to pay an insurance premium after my auto is declared a total loss?
Yes, the auto is considered insured until the policyholder returns the license plates to the Registry of Motor Vehicles. If you don't have your license plate because your auto was stolen or because your auto and plates were destroyed in a fire, you must go to the nearest Registry of Motor Vehicles office and obtain a lost or stolen plates receipt. This receipt must be presented to your insurance company in order to cancel your policy and avoid paying any additional premium.4.) May I keep my auto if I have a collision, limited collision or comprehensive claim and my insurance company declares it a total loss?
Your insurance company has the option to take title to your auto when it issues payment on your claim. The insurer is entitled to any salvage value your auto may have. You can, of course, negotiate with your company to purchase your auto for the agreed salvaged value.
5.) The body shop is repairing my auto after an insured loss. Will my insurance company pay for original equipment manufacturer (OEM) parts?
If the repair of the damaged part impairs the operational safety of the auto, the insurance company will pay to replace it with an OEM part. For non-safety parts, unless your claim occurs during the first 15,000 miles on the auto’s odometer, you are not entitled to OEM parts. For autos with more than 15,000 miles, state regulation allows for the replacement of damaged parts with used, reconditioned or after market parts. You can insist on OEM parts, but you will have to pay the difference in cost.
6.) An object damaged my windshield and I am unable to determine where it came from. Am I covered for this loss?
Yes, if you have comprehensive insurance you are covered for the full amount of the loss, unless you opted for a $100 deductible for glass breakage. The $300, $500, or $1000 deductible, or whatever you may have selected for comprehensive coverage, does not apply to a glass loss.
7.) Can my insurance company deny a claim for damages to my auto if the principle place of garaging listed on my application is false?
Yes. If you or someone on your behalf gives false, deceptive, misleading or incomplete information on any application and if such information increases the insurance company's risk of loss, your company may then refuse to pay claims under any or all of the Optional Insurance coverages of the policy. Such information includes the description and place of garaging of the vehicles to be insured, the names of the operators required to be listed and the answers given for all listed operators.
In the event that you have moved since you filled out your initial application, promptly notify your insurance company and the Registry of Motor Vehicles of your new address.
8.) Is my insurance company required to notify me of its decision to cancel my policy?
Yes. Your company must send you a notice at least 20 days prior to the effective date of the cancellation. A notice sent by regular mail with a certificate of mailing receipt obtained from the Post Office is considered sufficient. Certified or registered mail with a return receipt is no longer required.
9.) What can I do if I actually receive a cancellation notice?
You can pay the exact amount called for on the notice or, if you feel that the cancellation is unjust, you may submit a written appeal to the Board of Appeals at One South Station, Boston, MA 02110-2208. This must be done prior to the effective date of cancellation.
10.) Who is liable for the storage charges on my damaged auto when there is a dispute as to the amount of the claim payment?
The insurance company is responsible for paying storage charges until it makes a reasonable offer to settle the claim. However, if the consumer disputes the amount offered and the company revises its offer, this does not necessarily mean that the original offer was unreasonable. Disputes over what is reasonable can be resolved with your company through the process described in your insurance policy. You can also submit a written complaint to the Division of Insurance if you are unable to settle the dispute.
11.) May an insurance company request a down payment in advance when I purchase or renew an auto insurance policy? And is it possible to pay my premium monthly?
Your insurance company may request up to a 30 percent down payment of the annual premium prior to the renewal or issuance of your policy. However, if you’ve had a prior policy cancel for non-payment of premium, many companies will require that the premium be paid in full. Many companies offer an installment payment plan for the balance of the premium. You should check with your agent or company to see what options are available to you.
12.) If I own an auto with collision and comprehensive coverage, will my insurance apply to a rental or borrowed private passenger auto?
Yes. Your collision and comprehensive insurance coverages are transferable to a substitute rented or borrowed private passenger auto that is damaged while it is being operated by you or members of your household with the consent of the owner. There is no coverage under your policy for family friends or significant others. You should be aware that your coverage is available only if you rent or borrow a private passenger auto in the United States or Canada. You should also be aware that your policy does not provide coverage for a borrowed or rented truck. If you are renting a truck, you should check with the rental company regarding the purchase of collision and comprehensive insurance. If you are borrowing a truck, make sure you determine whether or not the owner has purchased collision or comprehensive coverage. If the owner does not have insurance, you may be personally liable for any damage to that truck which is the result of your negligent operation. If the use is for business rather than pleasure, call your agent first. Business use is usually not covered under your personal auto insurance policy.
13.) How do I go about switching insurance companies without paying a penalty?
Once you receive an invoice reflecting new (not estimated) rates and any applicable new deviations or discounts, you have 30 days to change insurance companies without paying a "short rate" penalty. If you make a change within this 30 day period, you will pay your former insurance company on a pro-rata basis at its newly established rates until the date the coverage with your new insurance company begins. If you choose to switch insurance companies outside of the 30 day period, you will be subject to a short rate penalty which decreases as your policy year progresses.
This information was compiled to help consumers answer some of the most frequently asked questions about personal automobile insurance. Additional questions or comments should be made to the Division of Insurance.