accordance with insurance laws. We produced this guide to help educate Maryland

residents about homeowners insurance.

e Insurance Administration is also responsible for investigating and resolving

complaints and questions concerning insurers that do business in Maryland.

Most people do not think about homeowners insurance until they have reason to

use it. Although we know that res, thefts and accidents occur, we tend to think,

else or damages their property.

You also will need insurance to protect your lender if you have borrowed money

to purchase your home. Most mortgage holders require you to have homeowners

insurance and that the policy name the mortgage holder as an additional insured

under the policy in order to protect their nancial interest in your home. However,

even if you do not have a mortgage on your home, you may still want to purchase a

homeowners insurance policy to protect you from nancial harm in the event of a

covered loss.

Whether you live on a farm, or own or rent an apartment, condominium, home

or mobile home, your home and its contents are probably your largest and

Homeowners insurance policies vary according to the types of property they are

designed to cover and the number of perils (causes of loss) that they cover. Policies

may be of the named peril type (re, windstorm, hail, vandalism, theft, etc.) or

of the open perils type (coverage for all causes of loss unless the cause of loss is

specically excluded), or a combination of both. While a number of insurers (or

insurance companies) oer the same type of coverages, many sell a policy that

provides extra or broader coverages.

Policies have various names depending on the insurer that sells them. However,

standard homeowners insurance policies are often referred to as:

• HO-2 Broad Form (Named Peril)

• HO-6 Condominium Unit Owners

• How much coverage you believe is necessary for your situation.

e property damage section of named peril policies contains a promise to pay for

losses to your home and/or its contents when caused by the perils specically named

in the policy. If your property is damaged due to a peril not listed in the policy,

your insurer will not pay for the damage. e named peril policy covers most, but

not all, of the common causes of damage to a person’s home or belongings. If you

are considering purchasing this type of policy, be sure that you understand the type

of coverage it provides.

An open perils policy, or all-risk policy, provides coverage for all causes of loss unless

the specic cause of loss is excluded from coverage under the policy. e open perils

all-risk policy and the named peril policy. is policy is called the Special Form

(HO-3). e property damage section of this policy provides open peril coverage on

the building and other structures by promising to pay for all losses to your property

except when the loss was caused by a peril that is specically excluded by the policy.

It provides named-peril coverage for the contents of your home. e named perils

are usually those listed in the Broad Form (HO-2). (See list on the next page.)

7. Vehicle or aircraft damage to your property

8. Smoke

9. Vandalism and malicious mischief

10. Breakage of glass

11. eft

12. Falling objects

13. Weight of ice, snow, or sleet damage

14. Collapse of building and any part thereof

15. Sudden and accidental damage, cracking, burning or bulging from steam

or hot water heating system or appliances for heating water

20. Additional living expenses

21. Personal liability insurance protection

22. Medical payments coverage

1. Covers a building against all perils unless specically excluded. Common

2 . Covers personal property against damage or loss caused by perils listed in

Form HO-2.

Read your policy to nd out what is covered and what is excluded.

or personal possessions, provides for additional living expenses in the event of a

covered loss that makes your home, apartment or condominium uninhabitable,

provides you with liability coverage, and provides for medical payments to others. It

and betterments”). The policy covers all perils

listed in the HO-2 Form. You also can purchase an endorsement to your HO-6

policy that would provide you with coverage for loss assessments in certain

situations, a fee charged by your condominium association. Your insurance producer

will be able to explain the limits to the alterations and additions coverage, and help

you determine whether you need to increase your policy limits.

The Maryland Condominium Act requires the condominium association to

purchase a master insurance policy that provides primary coverage for casualty

losses to the common areas, the actual structure, and the individual multi-

structures on your property, your personal property if it is away from your home,

trees and shrubbery, and debris removal.

your insurer promises to pay if a structure not attached to your home, such as

a detached garage, tool shed, swimming pool, fence or other building on your

property, is damaged by a peril covered by your policy. More coverage is available

for an additional premium. is coverage may not be included in certain types of

Coverage is limited to very small amounts for certain types of property that are

particularly susceptible to loss such as cash, securities, jewelry, furs, manuscripts,

and stamp or coin collections. You may receive a total of only $1,500 for all furs

or jewelry stolen in a single theft. A $500 limit usually applies to all securities,

receivables, travel tickets, and stamp collections. A coverage limit of only $100

is typical for all money, coins, or bank notes regardless of the actual amount lost.

Additional amounts of insurance can be purchased separately. You should ask your

homeowners insurance policy and at each renewal, you will receive an Annual

Statement that summarizes the coverage and exclusions under your policy.

is Annual Statement may help you understand your policy, but it is not a

substitute for your policy, as all rights, duties and obligations are controlled by

your insurance policy and contract of insurance.

cover losses resulting from oods. When you rst purchase your homeowners

insurance policy, you will receive a written notice advising you that the standard

homeowners insurance policy does not cover ood, and it will advise you how

When you apply for homeowners insurance, insurers evaluate your risk and the

likelihood you will le a claim. Once your level of risk has been determined, the

insurer will group you with policyholders that have similar risk characteristics.

en, the insurer will assign a rate based on the claims history for your risk group.

Some of the factors that may be considered are:

• prior claims. Whether you or your property have had any prior claims

• the age of the house. Newer homes are usually less expensive to insure

• access to and quality of local re protection. e distance between your

• the amount of coverage. e dollar limits (the amount of coverage) of

• the amount of the deductible. e deductible is the amount you will pay

• claims inquiries. Insurers are not allowed to increase your premium,

• death of a spouse. Insurers cannot increase your premiums if the only

• credit history. Insurers are not allowed to review an individual’s credit

• victims of crimes of violence. Insurers are prohibited from using an

Refer to our Homeowners Insurance: A Comparison Guide to Insurance Rates at

Any person who knowingly or willfully presents a false or fraudulent claim

• Do not sign a blank application.

• ISO: 1-800-627-3487 or at http://www.verisk.com/underwriting/a-plus-

• Question whether the insurer oers an ination-guard endorsement.

• Ask whether the insurer provides replacement-cost coverage for your

• Does the insurer oer full replacement-cost coverage on your personal

• Discuss with your insurance producer whether you should list and

• Ask about the dierence in price for basic liability limits of $100,000 and

• Insurers are required by law to oer licensed family day-care providers

• Your homeowners policy has some provisions that may prevent you from

Yes. e insurer has the contractual right to request any information it feels is

necessary to conrm ownership and value of the items claimed. e ultimate

property taken before the loss may help you document your claim.

damaged contents or the cost to replace them with like kind and quality items.

e insurer will ask that you produce an inventory or list of all damaged contents,

along with the date of purchase, amount paid and the amount to replace. Once the

list has been completed and provided to the insurer, the insurer will review all the

depreciation. Once you have replaced the items, copies of the receipts are submitted

to the insurer and the amount of depreciation held back by the insurer will be paid

to you. For example: your sofa was destroyed by a covered cause of loss, such as re.

e sofa was purchased 10 years ago for $1,500 and would be fully depreciated in

to repair or replace it, the insurer will pay no further monies to you and you will

receive only the actual cash value of the item.

Under state law, an insured has at least two years from the date of loss to request

the dierence between the actual cash value and the replacement cost of personal

property. However, an insurer may require an insured seeking additional payments

to notify the insurer within 180 days after the date of loss of their intent to replace

the personal property and to make a claim for additional monies beyond the actual

cash value.

For policies issued or renewed prior to January 1, 2011, the terms of the policy

will dictate the timeframes for providing notice and ling the claim for recoverable

depreciation. It is critical to read your insurance policy carefully to determine the

the recoverable depreciation.

lender in settlement of a claim for damage to your home so long as the lender is

listed as an “additional insured” on your policy. is information should be listed

on the declarations page of your policy but you also can call your insurer to conrm

Typically, a lender will require you to have the insurer list the lender as “mortgagee”

or “additional insured” on your homeowners policy as a condition of giving the

electronically from the insurer, the insurer must provide electronic notication 10

days in advance to the electronic mail address where the insured has consented to

receive notications from the insurer. Proof that you actually received notice is not

required.

insurance policies are usually issued for a term of 12 months. A nonrenewal occurs

when an insurer decides it will not oer to renew your insurance coverage at the

end of the current policy’s term. A cancellation occurs when an insurer decides to

An insurer may nonrenew your policy:

• if you led three or more weather-related claims within the preceding

• if a matter or issue related to your risk constitutes a threat to public safety;

• if you fail to pay your premium when due; or

• if you are convicted of arson.

cancellation or nonrenewal. All required notices must be given at least 45 days in

advance unless the cancellation is for nonpayment of premiums, in which case the

notice must be given at least 10 days in advance.

three prior years. is notice must state that the cancellation or nonrenewal may be

based on: (1) three or more weather-related claims within the preceding three-year

of the policy’s cancellation or nonrenewal, or, if the insured has elected to receive

notices electronically from the insurer, the insurer must be able to prove that it

provided electronic notication at least 45 days in advance to the electronic mail

address where the insured has consented to receive notications from the insurer.

Proof that you received the notice is not required.

An insurer may transfer your policy to an aliate (owned by the same parent

company) as long as: (1) the aliated insurer is admitted as an insurer in Maryland;

renewal policy premium at least 45 days in advance and that notice must contain a

disclosure of the transfer to the new insurer.

Insurers develop standards (known as underwriting guidelines that help them

determine if you still qualify for their policies. Each insurer develops their own

standards. Although insurers are concerned whether a loss is the result of your fault,

they also review and consider the size of any loss(es) and the frequency of losses

• at least 60 days before the refusal, the insurer has led with the Insurance

• the designation has an objective basis and is not arbitrary or unreasonable.

Additionally, if the insurer has led a “plan of material reduction” with the

certain geographic area of the state.

to try to resolve the issue. Meanwhile, you will be advised of the steps taken on your

behalf. Complaint les are not closed until the Insurance Administration has made

a determination regarding the complaint.

e MIA has established a Rapid Response Program designed to help certain

consumers resolve property and casualty claims (such as auto and homeowners

claims including those made under commercial lines policies) quickly and without

having to le a formal written complaint. For more information about this

program, please call us at 410-468-2340 or 800-492-6116 ext. 2340. Participation

in the Rapid Response Program is voluntary and does not aect your rights to le a

formal complaint.

A Maryland consumer who has a property and casualty insurance policy (property

and casualty insurance includes automobile, homeowners, re and/or dwelling,

inland marine, commercial liability policies) or an individual disability policy (a

policy that provides for lost income, revenue, or proceeds in the event that an

illness, accident, or injury results in a disability that impairs an insured’s ability

to work or otherwise generate income, revenue, or proceeds that the insurance is

intendeds to replace) that was issued, sold or delivered in Maryland and believes

that his/her property and casualty insurer or his/her individual disability insurer

failed to act in good faith in making a decision regarding his/her rst-party

les a civil complaint and the insurer is found to have failed to act in good faith,

the insured may be entitled to an award with enhanced damages. Such enhanced

damages may include, in addition to the actual contract damages, litigation

expenses, including reasonable attorneys’ fees not to exceed one third of the actual

damages payable to the insured, and interest at the post-judgment rate.

An explanation of when a consumer can seek these special damages, when a lawsuit

has to be led with the MIA, and how to make that ling are explained in a separate

MIA publication: “A Guide for Consumers Filing a 27-1001 Civil Complaint.”

caused by a peril covered by your homeowners policy. is does not cover all your

expenses, but only those reasonable costs and amounts that are beyond your normal

living expenses. If you stay with family or friends and do not incur additional

expenses, no payment for the cost of living quarters will be made.

about your claim.

as a result of a loss to covered property owned by all members of the association

caused by a peril insured against.

injury to another person or damage to another person’s belongings when the loss is

your fault.

condominium buildings including the common areas.

reasonable and necessary medical expenses of a person who is injured in an accident

at your home even if you are not at fault (medical payments coverage is not

available to you or a member of your household).