Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.
Listed below are some common homeowners insurance definitions.
Actual Cash Value:
Replacement cost less depreciation, considering the age and condition of your property.
Additional Living Expenses:
Pays expenses over and above your normal living costs (motel rooms, restaurant meals, and laundry service) while your home is being repaired or rebuilt after damage from an insured loss.
Agent:
A representative who sells insurance for one or more companies.
Application:
A signed request for insurance, giving information about the prospective policyholder
Appraisal:
An evaluation of your property.
Binder:
A temporary or preliminary agreement, which provides coverage until a policy can be written or delivered.
Broker:
A licensed person or organization you can pay to shop for insurance on your behalf.
Builders Risk:
Coverage for a home under construction. Claim payments are based on the percentage completed at time of loss. This coverage must be changed to a homeowners policy upon completion of the building.
Cancellation:
Termination of a policy before its normal expiration date.
Claim:
Your request for the insurance company to pay you an amount under the terms of your policy.
Claims Adjuster:
A person an insurance company hires to settle claims. The adjuster could either be a company employee or under contract with the company.
Coinsurance Clause:
An agreement with the insurance company in which you agree to carry insurance on your property in an amount equal to a certain percentage of its actual cash value.
Covered Expenses:
The losses or conditions the policy will pay for.
Deductible:
The dollar amount you must pay out-of-pocket for each claim before the insurance company begins paying.
Depreciation:
Decrease in home or property value due to age or wear and tear.
Earthquake Insurance:
A type of catastrophic coverage available for an additional premium to repair or replace your property/personal belongings when damaged by an earthquake. Standard home insurance policies do not cover earthquake insurance.
Endorsement:
Amendment to the policy used to add, change, or delete coverage. Also referred to as a "rider."
Exclusions:
Specific situations or circumstances listed in your policy describing when benefits will not be paid. Typical homeowners insurance exclusions are earthquake, sewer backup/sump pump failure, ordinance or law, and intentional loss.
Floater:
Additional coverage for personal property such as jewelry, artwork, or antiques not otherwise included in the homeowners policy, or included for a nominal coverage amount. The coverage "floats" or moves with the property. Also called "Scheduled Personal Property Endorsement."
Flood Insurance:
A type of catastrophic coverage available for an additional premium to repair or replace your property/personal belongings when damaged by rising water. Standard home insurance policies do not cover flood insurance. If your property is located on a flood plain, your lender may require you to purchase flood insurance.
Full Replacement Policy:
A homeowners policy that pays the full replacement cost (up to the policy maximum) to repair or restore damaged property.
Guaranteed Replacement Cost Coverage:
Endorsement that lets you replace your home without subtracting for depreciation, even if it costs more than the policy limit. Most companies limit the guaranteed replacement cost to 125%.
HO Forms:
Homeowners insurance polices are sometimes referred to by the kind of form used and the specific perils they cover. Examples are HO2, HO3, HO4, HO5, HO6, and HO8.
Home Inventory:
A detailed list of personal possessions and any information (including pictures or videos) that could help identify lost or destroyed items.
Illinois FAIR (Fair Access to Insurance Requirements) Plan:
A not-for-profit property insurance association that offers insurance to individuals who have been refused coverage by at least three insurance companies.
Illinois Insurance Guaranty Fund:
A fund that pays an insurer's claims when the company is insolvent. All Illinois-licensed insurance companies belong to the Illinois Guaranty Fund.
Inflation Guard Endorsement:
A special endorsement that increases the face amount of a homeowners policy on a regular basis to compensate for the increasing costs of home construction.
Inspection Report:
A report filed by an individual employed by the insurance company or credit agency, giving general information on the physical condition of the property.
Insured:
The policyholder or person(s) protected in case of a loss/claim.
Insurer:
The insurance company.
Lapsed Policy:
A policy that has terminated for non-payment of premiums.
Liability Coverage:
Insurance protection that pays for claims or judgments brought against the insured.
Market Value:
A real estate term for the current value of your home if you were to sell it. Market value includes the price of land, and is not generally used when settling insurance claims.
Mine Subsidence Insurance:
Pays when an underground mine shifts, causing damage to your property. Insurance companies must offer mine subsidence insurance in counties where mines are under one percent or more of the land. Underground mines are common in central and southern Illinois, but other areas of the state may be affected as well. You must sign a rejection form to remove this coverage if you live in a county where mine subsidence insurance is required.
Non-Bound Application:
There is no coverage involved and you pay no money. The insurance agent submits the application to the company to find out whether or not you will be accepted.
Non-renewal:
A notice of the insurance company’s refusal to renew your policy prior to the end of the policy term.
Peril:
Event causing damage to your property (for example: fire, tornado, theft, or vandalism).
Personal Property:
Personal belongings such as furniture, appliances, clothes, jewelry, and bicycles.
Private Mortgage Insurance (PMI):
Insurance that provides financial protection to your lender if you default on your mortgage payment. By purchasing PMI, a homebuyer may be able to obtain a mortgage with little or no down payment.
Policy:
The contract form issued by the company to explain the coverage provided. It is a legal document.
Premium:
The price charged for insurance.
Public Adjuster:
A person you can hire to help settle a claim with an insurance company. A public adjuster may be hired to handle a complex or difficult loss negotiation. Generally, the public adjuster receives a percentage of the settlement reached. In Illinois, a public adjuster must be licensed with the Department of Insurance.
Real Property:
Property considered to be immovable, such as land and things affixed to it.
Replacement Cost:
A determination of the cost to replace contents, rebuild your home, or repair damages with materials of like kind and quality, without subtracting for depreciation.
Settlement:
After negotiating, the amount you accept from the insurance company as full payment for your loss.
Sewer Back-up and Sump Pump Overflow Coverage:
Coverage available for an additional premium to your homeowners insurance policy that pays for damage to your finished basement caused by water or waterborne material which backs up through a sewer, drain or overflow or is discharged from a sump pump overflow. Water seepage is not covered.
Title Insurance:
Protection against any defect in the title to your property. Title insurance can be paid for by either the buyer or seller and is usually paid for when the home is purchased.
Umbrella Liability Insurance:
A policy that "floats" above your other coverage. You must carry a certain amount of underlying liability coverage before you may buy an umbrella policy. This coverage kicks in if you are sued for an amount greater than the limits of your homeowners policy.
Watercraft Endorsement:
Applies to small motorboats and sailboats and broadens your personal liability and medical payments coverage on them. If your watercraft exceeds a specified length, you will need a separate boat owners or yacht policy.
Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.
If your homeowner's insurance company terminates your policy without your permission, your company has certain duties and you have certain rights. A company may terminate a policy without your permission in three ways:
A company's duties and your rights differ depending on whether your policy is rescinded, canceled or nonrenewed. This fact sheet explains what happens when your policy is being canceled before its expiration date.
During the first 60 days of a new policy, your company may cancel for almost any reason. Illinois law allows companies 60 days to look at your risk and decide whether they want to issue you a policy.
If a check, credit card charge, or money order given for the initial premium payment is not processed due to insufficient funds, the new policy may be considered null and void and cancellation provisions will not apply. After your new policy has been in force more than 60 days, or if you have a renewal policy, your company may only cancel you for one of the following reasons:
If the company cancels your policy because the property condition has declined and it believes the risk originally accepted has increased, the company must allow you time (not more than 90 days) to make required repairs.
Effective January 1, 2003, an insurer is prohibited from canceling your homeowners policy solely on the basis that one or more claims have been made against any policy during the preceding 60 months for a loss that is the result of a hate crime committed against the person or property insured if the insured provides evidence to the insurer that the act causing the loss is identified as a hate crime on a police report.
The company must send you a written notice explaining why it is canceling your policy. The notice must also explain two important items:
The company must mail a cancellation notice to you at your last known mailing address, so it is important for you to notify your insurance agent or company if you move. The company must mail your cancellation notice:
The company must keep proof that it mailed your notice, but it does not have to show proof that you received it.
If you believe your company failed to follow the required steps when it canceled your policy, you may appeal the cancellation to the Director of Insurance. To do so, you must:
If your hearing is granted, we will send you written notice about the time and date of the hearing.
Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department. If your homeowner’s insurance company terminates your policy without your permission, your company has certain duties and you have certain rights. A company may terminate a policy without your permission in three ways:
A company’s duties and your rights differ depending on whether your policy is rescinded, canceled or nonrenewed. Furthermore, your rights and your insurer’s responsibilities depend upon the nature of the policy, as well as the length for which the policy has been in effect. This fact sheet explains what happens when your private homeowner’s insurance policy is being nonrenewed at its expiration date.
A private homeowner’s policy is sometimes referred to as a “policy of fire and extended coverage insurance.” These policies cover real property that is used principally for residential purposes, usually including a building that houses up to 4 families. Typically, the policies also cover any household or personal property that is commonly used for daily life. If your policy is not for residential purposes, but rather covers a commercial building, the following information may not be applicable.
A company may nonrenew your private homeowner’s policy for different reasons depending upon the duration that your policy has been in force. If your policy has been continuously active less than 5 years, please see Nonrenewal of Private Homeowner’s Insurance Policy Active for Less Than 5 Years. If your policy has been continuously active for 5 or more years, please see the appropriate section below labeledNonrenewal of Private Homeowner’s Insurance Policy Active for 5 or More Years.
A company may nonrenew your homeowner’s policy for any reason except age or location of the property, or the age, gender, race, color, ancestry, marital status or occupation of the occupants.
If the company nonrenews your policy because the property condition has declined, the company must allow you time (not more than 90 days) to make required repairs.
A company is prohibited from nonrenewing your homewowner's policy based solely on credit report information. If credit information from your credit report is used to nonrenew your insurance policy, the insurer must provide you with the name of the national credit bureau that supplied the information so that you can get a free copy of your credit report. For more information about credit scoring, see our fact sheet entitled Understanding How Insurers Use Credit Information.
Effective January 1, 2003, an insurer is prohibited from nonrenewing your homeowner’s policy solely on the basis that one or more claims have been made against any policy during the preceding 60 months for a loss that is the result of a hate crime committed against the person or property insured if the insured provides evidence to the insurer that the act causing the loss is identified as a hate crime on a police report.
The company must send you a written notice explaining why it is nonrenewing your policy. The notice must clearly articulate the specific reason(s) for nonrenewal. The company may not simply state “fraud” or “misrepresentation,” but rather provide factual basis for such reason(s). The notice must also explain two important items:
Note: If your insurer merges or restructures with another company, or if your insurer reclassifies your policy (possibly due to an excess of claims), the company must mail you a notice about the change 60 days prior to a change in your policy.
The company must mail a nonrenewal notice to you at your last known mailing address, so it is important for you to notify your insurance agent or company if you move. The company must mail your nonrenewal notice:
The company must keep proofthat it mailed your notice, but it does not have to show proof that you received it.
If you believe your company failed to follow the required steps when nonrenewing your policy, you may appeal the nonrenewal to the Director of Insurance. To do so, you must mail or deliver your written request for a hearing to the Department of Insurance at least 20 days before the expiration date, explaining in detail why you believe the company has improperly nonrenewed your policy.
If your hearing is granted, we will send you written notice about the time and date of the hearing.
A company may elect to not renew your homeowner’s policy for a limited set of reasons if it provides 30 days written notice, or for nearly any reason if it provides you with 60 days written notice (the limited reasons for 30 days notice are available below). In either case, your insurer may not nonrenew your policy for reasons of age or location of the property, or the age, gender, race, color, ancestry, marital status or occupation of the occupants. If the company nonrenews your policy because the property condition has declined, the company must allow you time (not more than 90 days) to make required repairs.
Furthermore, a company is prohibited from nonrenewing your homeowner's policy based solely on credit report information. If credit information from your credit report is used to nonrenew your insurance policy, the insurer must provide you with the name of the national credit bureau that supplied the information so that you can get a free copy of your credit report. For more information about credit scoring, see our fact sheet entitled Understanding How Insurers Use Credit Information.
Effective January 1, 2003, an insurer is prohibited from nonrenewing your homeowner’s policy solely on the basis that one or more claims have been made against any policy during the preceding 60 months for a loss that is the result of a hate crime committed against the person or property insured if the insured provides evidence to the insurer that the act causing the loss is identified as a hate crime on a police report.
When the company has mailed written notice of nonrenewal of a policy that has been in effect 5 years or more only 30 days before the nonrenewal date, an insurer may only decide to nonrenew your policy for the following reasons:
For all other reasons, your company must mail you written notice 60 days in advance of nonrenewal.
The company must send you a written notice explaining why it is nonrenewing your policy. The notice must clearly articulate the specific reason(s) for nonrenewal. The company may not simply state “fraud” or “misrepresentation,” but rather provide factual basis for such reason(s). The notice must also explain two important items:
Note: If your insurer merges or restructures with another company, or if your insurer reclassifies your policy (possibly due to an excess of claims), the company must mail you a notice about the change 60 days prior to a change in your policy.
The company must mail a nonrenewal notice to you at your last known mailing address, so it is important for you to notify your insurance agent or company if you move. The company must mail your nonrenewal notice:
The company must keep proof that it mailed your notice, but it does not have to show proof that you received it.
If you believe your company failed to follow the required steps when nonrenewing your policy, you may appeal the nonrenewal to the Director of Insurance. To do so, you must mail or deliver your written request for a hearing to the Department of Insurance at least 20 days before the expiration date, explaining in detail why you believe the company has improperly nonrenewed your policy.
If your hearing is granted, we will send you written notice about the time and date of the hearing.
Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.
Fires and natural disasters are unforeseen and unpredictable, and the recovery process can be overwhelming. If your property or home was insured you will have to work through your company’s claims process, and you may be approached by an “insurance adjuster” who claims he or she can obtain a more favorable settlement from your insurance company. You should always be suspicious of any individual offering a service or benefit that sounds or appears “too good to be true” and contact the Department before entering into a contract or formal agreement that raises questions or suspicion.
This fact sheet provides information about public adjusters and answers some frequently asked questions. For more information please visit insurance.illinois.gov or call the Department toll-free at (866) 445-5364.
There are three types of insurance adjusters:
No. Many consumer find that the services offered by public adjusters can be performed, for free, by trained insurance company staff. You may wish to speak with Department staff before engaging the services of a public adjuster.
Your insurance company also has knowledgeable claim adjusters who are available to assist you with the claim process.
No. Insurance policies do not cover the fees of a public adjuster.
You must pay for the services provided by a public adjuster. Typically, public adjuster’s charge a fee equal to a certain percentage of the claim paid by your insurance company. In other words, after your insurance company settles your insurance claim, the public adjuster could take a percentage of that settlement.
Yes. All fees charged by the public adjuster can and should be negotiated.
Once you sign a contract with a public adjuster, the public adjuster will notify your insurance company, who will then send all correspondence to your public adjuster. You should ask the public adjuster to routinely update you on the progress of your claim. The insurance proceeds will be sent to you and you must then give the adjuster the fee that you agreed to on the contract with him.
Yes. Illinois law requires the public adjuster to provide you with a written contract which has been approved by the Director of Insurance.The contract should specify the services the public adjuster will provide for you and any salary, fee, commission, compensation or other consideration he or she will receive for those services. The contract you sign with the public adjuster is binding and can only be canceled by certified mail within 5 business days after the date the contract was signed.
Yes. A public adjuster cannot solicit you while a “loss-producing occurrence,” such as a fire, is continuing or while the fire department or its representatives are engaged at your property. A public adjuster is also prohibited from soliciting your business between the hours of 7:00 p.m. and 8:00 a.m. If a public adjuster approaches you during these times you should report him or her to the Department.
Yes. A public adjuster is required to serve with objectivity and complete loyalty for your interests alone and to render to you such information, counsel, and service as will best serve your insurance claim needs and interests.
Yes. Illinois law requires public adjusters to be licensed with the Department of Insurance. Contact the Department at (866) 445-5364 to verify that the public adjuster is licensed and in good standing before signing any contract.
Useful information on insurance coverage and how to handle the insurance claims process can be found in the Department’s consumer fact sheet entitled “When Disaster Strikes – What to do After an Insured Homeowners Loss.” The fact sheet can be found on the Department’s website, insurance.illinois.gov, or by clicking here.
Trained insurance professionals are also available to assist you for free at the Department of Insurance, which can be reached toll-free at (866) 445-5364.
What You Need To Know About Renter’s Insurance
The National Association of Insurance Commissioners (NAIC) is launching a campaign to bring awareness to homeowners the importance of proper bonding of yellow corrugated stainless steel tubing (CSST) due to potential damage risks associated with lightning. Please check out the following links for additional information regarding CSST:
Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.
Homeowners insurance is an important purchase for many people. There are two major reasons to buy homeowners insurance:
Most homeowners insurance policies provide a package of coverages. The main types of coverage are described below. Keep in mind that you're covered only if the loss is caused by a peril your policy covers. For example, if your home becomes unlivable due to an earthquake and your homeowners policy doesn't cover earthquakes, your policy won't pay for loss of use of your home. Review your policy for the limits of your coverage.
Peril is an insurance term for a specific risk or reason for a loss. Some policies cover all perils except ones specifically excluded. At the other extreme are policies that cover only the perils named in the policy.
To be reimbursed for damage to your property, a covered peril (such as fire, theft or windstorm) must have caused your loss. Which perils your policy covers depends on the type of policy you buy. The most common types of homeowners policies are listed below. All of the policy types except the dwelling fire form cover your dwelling and its contents, as well as personal liability and medical payments. Read Table 1 to learn the specific perils each type of policy covers.
A type of homeowners policy is called a Form.
There are other types of insurance for other types of residences. If you own a townhouse, you may insure it through either an individual homeowners policy or an association master policy. If you live in a mobile home that has wheels and doesn't rest on blocks or a permanent foundation, in most states you'll buy a form of automobile insurance. This insurance offers far less coverage than homeowners policies. If your home is on land used for farming or raising livestock, ask about a farmownerspolicy.
The National Flood Insurance Program (NFIP) defines flood to be a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more adjacent properties (at least one of which is the policyholder's property) from: overflow of inland or tidal waters, unusual and rapid accumulation or runoff of surface waters from any source, mudflow, or collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels
You can buy NFIP flood insurance directly from your property and casualty insurance agent or insurance company if your community participates in the NFIP. You can find out if your community participates by visiting the following NFIP Web link: http://www.floodsmart.gov/floodsmart/.
Your insurance agent or insurance company also can confirm whether flood insurance is available to you and what it would cost.
It is very important to plan ahead. A flood insurance policy will not go into effect until 30 days after you buy the policy.
Your insurance agent usually will help you decide how much dwelling coverage to buy when you first get homeowners insurance. Your coverage should equal the full replacement cost of your home. Note that replacement cost and market value are not the same. The market value, which includes the price of your land, depends on the real estate market.
You should review your dwelling coverage from time to time to be sure it doesn’t drop below the cost to replace your home. If it drops below 80% of the full replacement cost of your home, your insurance company may reduce the amount that it will pay on a claim.
The limits of your coverage for other structures, for personal property and for loss of use of your home are expressed as percentages of your dwelling limit. The coverage is usually a set percentage (see Table 2). For example, if your dwelling coverage limit is $150,000 and your coverage for personal property is limited to 50% of your dwelling coverage, your coverage for personal property would be $75,000. Check your policy, as coverage limits might be based on percentages different from those in Table 2. You choose your coverage limits for your personal liability and for medical payments.
Coverage Component | Typical Limit of Coverage |
---|---|
Dwelling | You Choose |
Other Structures | 10% of Dwelling Coverage Limit |
Personal Property | 50% of Dwelling Coverage Limit |
Loss of Use | 20% of Dwelling Coverage Limit |
Personal Liability | You Choose |
Medical Payments | You Choose |
A deductible is the money you have to pay out-of-pocket on a claim before the policy pays the loss. The deductible applies to coverage for your home and personal property and is paid on each claim. Higher policy deductibles mean lower policy premiums. A policy with a $1,000 deductible will have a lower premium than the same policy with a $500 deductible. In some locations, there are also catastrophe deductibles, which are expressed as a percentage instead of a dollar amount.
Having a higher deductible can be a good way to save money on your homeowners insurance premium and to submit fewer claims. However, be sure you can afford the deductible in case you have a loss.
You can choose to insure your home and its contents for either replacement cost or actual cash value. Replacement Cost is the cost to rebuild your home or repair damages using materials of similar kind and quality. Actual cash value is the value of your home considering its age and wear and tear. Actual Cash Value coverage pays you for your loss, but often doesn't pay enough to fully repair or replace the damage.
You can add other coverages. Sometimes, you can add coverage by buying an endorsement; other times, you must buy another policy to cover a specific peril or a specific item of property. Some reasons you might want to add coverages are:
While homeowners insurance isn’t designed to cover most business uses of your home, some policies might cover some business uses, at least partially. For example:
You might hear about other types of insurance, especially when you buy your home. Lenders usually require private mortgage insurance (PMI) if your down payment is less than 20% of the home’s purchase price. PMI protects the lender if you default on your mortgage. The PMI premium is often included in your monthly mortgage payment.
Title insurance protects you and the lender against any monetary loss due to errors in the title. You usually pay for title insurance as a one-time fee when you buy a home.
A home warranty covers the mechanical breakdown of individual parts of a home, such as the electrical and plumbing systems. A warranty doesn’t cover the home’s structure, may or may not cover appliances, ends at a specific point in time (for example, one year) and has exclusions and limitations that you should review. Home warranties might not be regulated as insurance in your state.
Many factors affect the premium you pay, including which insurance company you choose. Different insurance companies charge different premiums for similar coverage. Decisions you make about how much insurance coverage to buy also affect your premium. Some of the other things that are likely to affect your premium are:
Different insurance companies charge different rates for the same coverage. Also, not all insurance companies provide the same level of claims service. Therefore, it makes sense to shop around for the best insurance company for your needs.Insurance companies use one of three methods to sell their products.
You can find insurance companies and agents through the phone book, on the Internet and television and by asking friends and neighbors.
Customer service is important to most consumers, particularly when they have a claim. You can get a sense of how well an insurer serves its customers from a complaint index. A complaint index measures how many complaints the Department of Insurance receives relative to the size of the company.
It’s illegal for unlicensed insurers or agents to sell insurance. Business cards aren’t proof that an agent is licensed. If you do business with an unlicensed agent or company, it might not pay your claims or refund your premiums if you cancel your policy. If an unlicensed agent or company contacts you, check with the Department of Insurance immediately, so it can investigate. Your actions may protect someone else from being victimized.
You also want to buy insurance from a company that’s financially sound. You can check the financial health of an insurance company by using ratings from independent ratings agencies such as Standard and Poor’s, A.M. Best and Moody’s.
Getting premium quotes is a good way to compare different companies’ prices. But, first you should decide what coverages and policy limits you need. It’s important that you know how much it would cost to rebuild your home. An insurance agent or a contractor might be able to help you estimate the cost to rebuild your home.
When you get quotes, it’s crucial that you ask for the same coverages and limits and give the same information to each agent or company. To give you an accurate quote, the insurance agent or company will usually ask for a description of your house (such as where it’s located, its square footage, when it was built and the type of construction). He or she also might ask about items that increase your insurance needs, such as owning pets and expensive possessions. An agent might visit your home to take a photo or ask you for other information (such as the distance from the nearest fire department and the general condition of your home). Be sure to get rate quotes and key information in writing.
Make sure you ask the insurance agent if you qualify for any discounts. Some insurers offer a discount if you also buy your auto insurance from them or if you disaster-proof your home (for example, add storm shutters), update the home’s electrical or plumbing systems, get a new roof or add home security devices (for example, a burglar alarm).
Also, be sure to find out how much your premium will change if you choose different deductibles.
While you’re getting quotes, you should also ask the agent some of these questions:
If you’re thinking of buying a home, you can ask an agent to estimate the cost of insurance.
A homeowners insurance policy is a legal contract. It’s written so that your rights and responsibilities, and those of the insurance company, are clearly stated. You should read your policy and be sure you understand it. If you have questions about your insurance policy, contact your insurance agent or company.
When you buy homeowners insurance, you will receive a policy—not a photocopy. If you don’t receive a policy within 30 days, contact the insurance company, not the agent.
Keep your policy in a safe place and know the name of your insurer. If you still have questions, contact the Illinois Department of Insurance..
Other helpful tips:
Read your policy—it’s your guide to the types of losses that may or may not be covered. How often you file a claim and the types of claims you file often affect your premium and whether your insurer will renew your policy. If the cost to repair the damage is not much more than your deductible, you might want to pay for the repairs without filing a claim.
Most insurance companies report your homeowners claims to private nationwide claims databases (such as the Comprehensive Loss Underwriting Exchange, better known as CLUE). Insurance companies use these databases to see the claims you've submitted in the past.
To file a claim, contact your insurance agent or company as soon as possible, however, make sure the damage is more than your deductible since any claim whether paid or not is reported to CLUE . Ask about forms or documents you’ll need to support your claim. You’re also required to protect your home from further damage. For example, you might need to board it up or clean up water from a backed-up drain.
The insurance company will assign a claims adjuster to assess the damages and determine the payment. These adjusters may be employees of the company or independent contractors. You should cooperate with the adjuster’s investigation of your claim. The adjuster will probably want to meet with you at your house to inspect the damage. Jot down notes and keep track of the dates of any conversations you have with your insurance agent or adjuster.
If there are disagreements between you, the insurer and the claims adjuster, first try to resolve them with your insurer. Don’t feel rushed or pushed to agree with something you aren’t comfortable with. It might help to have your contractor meet with you and the insurance adjuster.
If you and the insurer still disagree about the value of the claim, check your policy for an appraisal clause. Another option is to hire an attorney or a public adjuster.
Public adjusters are not attorneys or government employees. They are freelance adjusters that charge you a fee. They are usually hired by the consumer to help settle a complex or difficult loss negotiation with an insurance company.
Be certain you understand what services the public adjuster will provide, and the fees he/she will charge (usually 10% of your claim.). Illinois law requires public adjusters to be licensed with the Department of Insurance. Contact our Department to verify a public adjuster’s license.
If you have trouble with or questions about your claim, you also may contact the Illinois Department of Insurance for help. The consumer services personnel can help you work with your insurer to resolve disagreements.
There’s a big difference between an insurance company cancelling your policy and not renewing it.
Cancellation means either you or your insurance company stop the coverage before the policy’s normal expiration date (which is usually 12 months after the policy starts). You can always cancel your policy for any reason. When you’re a new policyholder, your insurance company can cancel your policy for almost any reason within the first 60 days.. After that, it can only cancel you if you don’t pay your premium, if you’ve lied on your application or if your risk has changed substantially.
If your insurance company cancels your policy, it must give you 30 days notice and any refund shall be on a pro rata basis. If you cancel your policy, the company shall refund any premium on a short rate basis.
Non-renewal means the company refuses to renew your policy after it expires. Insurance companies generally have the right to not renew your policy. If your company chooses not to renew your policy, it must give you 30 days notice. All notices shall provide a specific explanation of the reason(s) for nonrenewal. You also may choose not to renew your policy.
Non-renewals on homeowner’s policies that have been in effect greater than 5 years, must be given 60 days notice.
If you cannot find homeowners insurance, talk to your insurance agent about the Illinois FAIR Plan. The FAIR Plan is an association that operates like an insurance company. All property and casualty companies that sell basic property insurance in Illinois fund the plan.
To qualify for coverage with the FAIR Plan, you must have three unsuccessful attempts to buy property coverage from insurance companies and your property must meet basic fire, loss prevention, and safety standards.
The FAIR Plan offers most of the home, personal property, and personal liability coverages that you can get with a private insurance company. However, the FAIR Plan should be your last resort. You may be able to get a better deal with a traditional insurance company.
Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.
A growing number of personal auto and homeowners insurance companies now use consumer credit information to decide whether to issue or renew policies, or to decide what premiums to charge for those policies.
This fact sheet is designed to help you understand how your credit information is being used, and how it may affect your insurance purchases.
Yes. A federal law, the Fair Credit Reporting Act (FCRA), states that insurance companies have a “permissible purpose” to look at your credit information without your permission.
Some insurance companies believe there is a direct statistical relationship between financial stability and losses. They believe that as a group, consumers who show more financial responsibility have fewer and less costly losses, and therefore, should pay less for their insurance. Conversely, they believe that as a group, consumers who show less financial responsibility have more and costlier losses, and therefore, should pay more for their insurance.
Insurers that use credit information and entities that have developed credit scoring models state that there is no difference in credit scores among different income levels because there are just as many financially responsible low-income consumers as there are financially responsible high-income consumers.
As of October 1, 2003, Illinois law prohibits insurers from using a scoring model or other process using credit, on new or existing business, if such model or other process using credit contains any of the following factors: income, gender, address, ethnic group, religion, marital status, or nationality of the consumer.Although some insurance companies still look at your actual credit report, most companies now use a “credit score” or an “insurance score.” A score is a snapshot of your credit at one point in time.
Insurance companies and entities that have developed credit scoring models use several factors to determine credit scores. Each factor is assigned a weighted number that, when applied to your specific credit information and added together, equals your three-digit credit score ranging from 0-999, depending on the insurance company and the credit scoring model used. Generally, the higher the number, the more financially responsible the consumer.
Following is a list of the more common credit factors used in determining credit scores:
Companies use credit in two ways, to underwrite and rate your insurance policy.
Underwriting is the process where an insurer gathers information about you and decides whether or not they will insure you. Illinois law allows an insurer to deny you a new policy, or to cancel or nonrenew your existing policy based solely on information obtained from your credit report, as long as the insurer offers coverage through an affiliate company, even if the coverages, terms, or conditions offered in the affiliate are different.
Rating is a process that determines how much you pay for insurance when an insurer places you into a specific rating "tier" or level, or places you with a specific company within their group of companies.
Some insurers use credit information along with other more traditional rating factors such as motor vehicle records and claims history. Other insurers use credit information as the sole factor in determining rates. Illinois law allows an insurer to base your renewal rates solely upon credit information, as long as they offer you coverage in another tier of the same insurer, even if the coverages, terms, or conditions offered in the other tier are different.
If an insurer uses credit information in underwriting or rating, Illinois law requires the insurer or its agent to tell you at the time they take your application, that the company may obtain your credit information. The disclosure must be in the same medium as the application. For example, if the application is taken in writing, the disclosure must be in writing. If your application is taken verbally or on the phone, the disclosure must be provided in the same manner. Ask the agent or company if they will check the credit information of other people insured on your policy, such as family members, and how their credit information will affect your eligibility, your coverages, or your premiums.
If your credit information causes an insurer to take a negative or "adverse action" against you, both the FCRA and Illinois law require the insurer to tell you about the "adverse action." Examples of an "adverse action" include denying, canceling, or nonrenewing your insurance policy, giving you a limited coverage form, not giving you the best rate, not giving you a discount, giving you a surcharge or higher rate, or not placing you in the company's best tier or program.
The company may tell you about the adverse action either verbally or in writing, and the company must give you up to four (4) of the top factors about your credit information that caused the adverse action. The adverse action notice must also list the name of the national credit bureau that supplied the information so that you can get a free copy of your credit report if you are eligible.
If your credit information did not cause an adverse action, and if you are not a new customer to your insurer, but you still wish to know if your company is using your credit information, or how your credit information affects your insurance coverages or premiums, ask your agent or company directly.
Possibly. Sometimes an insurer will find "no hits," "no score," or a "thin file," which means they cannot find a meaningful credit history for you. This lack of credit information could occur if you're young and haven't yet established a credit history, if you don't believe in using credit and have always paid in cash, or if you have recently become widowed or single and all of your previous credit information was in your spouse's name.
Illinois law prohibits an insurer from taking adverse action against you solely because you do not have a credit card account. In addition, if the insurer finds no meaningful credit information for you, Illinois law requires the company to do one of three things:
If you know that you have an established credit history, make sure your agent or insurance company is using your correct social security number, birth date, or other information to find your records.
No. In fact, the agent or company underwriter might not even know your actual credit score. Instead, all your agent or underwriter may know is that your score qualifies you for a particular tier or company within the group.
Find out which credit information factors had a negative impact on your credit score. Your agent or company should be able to tell you up to four (4) factors that had the most impact on your score.
Under federal law, if you have been denied credit or insurance, if you are on welfare or unemployed, or if you are the victim of identity theft, you are entitled to a free copy of your credit report from the credit reporting bureaus.
The three national credit bureaus are:
Most consumer groups suggest you get a copy of your credit report once a year and review it for errors, even if you have not been denied credit or insurance.
As of March 1, 2005, consumers can get a free copy of his/her credit report from each of the three national credit bureaus (Equifax, Experian, and Trans Union) once every 12 months.
Contact information is as follows to order reports (please do not contact the credit bureaus directly):
Since the three national credit reporting bureaus do not share information with each other, if you correct an error on one report, it will not "fix" incorrect information on the other reports.
If you report an error, the credit bureau must investigate the error and respond to you within 30 days. The credit bureau will contact whoever reported the information (e.g. the bank, credit card company, collection agency, court clerk, etc.) to verify its accuracy.
If the disputed information cannot be verified, or if the reporting entity agrees that the information is incorrect, the credit bureau must remove, complete, or update the information. Also at your request, the credit bureau must send a notice of the correction to any creditor that has checked your file in the past six months.
If the reporting entity verifies that the information is indeed correct, the credit bureau will not remove the information from or change the information on your credit report. However, the FCRA permits you to file a 100-word statement explaining your side of the story, and the reporting bureau must include your statement with your credit information each time it's sent out. Make sure your insurance company has a copy of your statement, and ask if they will take it into account.
Once the errors are removed or corrected, it's a good idea to obtain a new copy of your credit report several months later to make sure the incorrect or erroneous information hasn't been reported again.
Don't wait until the credit bureau investigates the errors to contact your insurer. Tell your insurer right away and ask if the insurer will wait to use your credit information until the errors are corrected. Small errors may have little or no affect on your credit score, but big errors can make a significant difference in your insurance coverages or premium. If you or the consumer reporting agency notifies the insurer that the dispute has been resolved in your favor, Illinois law requires the insure to re-underwrite or re-rate you within 30 days after receiving the notice, and make any necessary adjustments. If the insurer has determined that you overpaid premium, Illinois law requires the insurer to refund any overpayment you made for the past 12 months of coverage, or the actual policy period, whichever is shorter.
If you can't resolve your credit problems alone, a non-profit credit counseling organization may be able to help you. Non-profit counseling programs are often operated by churches, universities, military bases, credit unions, and housing authorities. You can also check with a local bank or consumer protection office to see if they have a list of reputable, low-cost financial counseling services.
Some credit repair firms promise, for a fee, to get accurate information deleted from your credit file. Be wary of those entities because accurate information cannot be deleted from your credit record. You have the same access to credit reporting agencies that credit repair firms do and you are entitled to dispute credit report items for free.
What to do before and after a disaster
English | Spanish (Español) | Polish (Polski) | Chinese ((形) 中國的, 中國話的)
Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.
There are agencies and groups available to help ease the burdens caused by major disasters - tornadoes, floods, or earthquakes. This fact sheet links consumers to organizations that offer information and assistance before, during, and after a disaster.
We suggest that you contact your insurance producer and/or insurance company first. If you would like the Department of Insuranceto assist you with a problem regarding your insurance company, you can file a complaint electronically or obtain a complaint form by calling one of the numbers listed below. Insurance analysts are available to answer general questions.
Assistance for Spanish-speaking consumers is available through both the Hotline and our Chicago office.
Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.
Disasters are unforeseen and unpredictable. In Illinois, the most likely disasters to strike your home (depending on your location) are tornados, floods, and earthquakes. If your property is damaged or destroyed, you will likely have many questions and be faced with many decisions. Concerns about temporary shelter, emergency repairs, and the costs of restoring or rebuilding your home can be overwhelming.
For information on organizations that assist in disaster related circumstances: Disasters - Who Can You Contact.
Homeowners or renter’s insurance is your protection against a devastating loss. It is important to have some form of insurance coverage for your property and personal belongings. If you rent, your landlord may insure the building you live in, but the landlord’s insurance doesn’t cover your personal belongings. For information about shopping for homeowners insurance, see our Shopping for Homeowners Insurance fact sheet.
Here are some things you can do before a disaster strikes to make claim handling a little easier:
You should contact your insurance producer or company as soon as possible after a disaster strikes. Provide as much detail as you can about damage to your property. After a natural disaster, insurance companies may communicate the proper procedures for filing a claim via local newspapers, radio or television.
If your insurance company does not have representatives on the scene available to help you, call the company directly and ask for the claims department. The company’s contact number should be listed in your policy or can be obtained through the Department of Insurance. Be sure to provide all phone numbers where you may be reached, especially if your home is uninhabitable. Your insurance company will need to contact you.
In order to take charge of your situation, it is very important that you fully understand your rights and responsibilities. Recognize that after a disaster strikes you may be emotionally distressed. This is normal. Have a trusted friend or family member assist you. If your insurance policy has been lost or destroyed in the disaster or if you are confused about the policy benefits or exclusions, ask your insurance producer or company exactly what coverages you have purchased. Ask for a copy of the policy.
To protect your property from further damage, you should make all necessary temporary repairs, such as boarding up windows and patching holes in walls or roofs, as soon as possible--even if you have not yet seen the company representative. Listed below are some tips on making temporary repairs to your property.
An adjuster from the company may come to your home and prepare a written damage estimate for the company. Be sure to get the name and telephone number of your adjuster in case you need to contact him/her or provide information to the company. You should obtain a copy of the estimate report, and do not hesitate to ask questions if you don’t understand it. If you have questions or need additional assistance regarding your adjuster or company, contact the Department of Insurance.
You can also hire a public adjuster to help you with a claim. Public adjusters are usually hired by the consumer to help settle a complex or difficult loss negotiation with an insurance company. Generally, the public adjuster receives a percentage of the settlement reached (usually 10% of your claim.) Choose a public adjuster carefully. Be sure you understand what services the public adjuster will provide and the fees he/she will charge. Illinois law requires public adjusters to be licensed with the Department of Insurance. Contact our Department to verify a public adjuster’s license.
The claim process may begin in one of two ways: your insurance company may send a claim form, known as a “proof of loss form,” for you to complete; or a claims adjuster may contact you before you are asked to fill out any forms. A claims adjuster is a person who is professionally trained to assess the damage. He/she may be a company employee or work under contract with the company.
Your policy divides your claim in two separate parts – one for the house itself and one for the personal property or contents. You may also be entitled to reimbursement for additional living expenses. The check or draft payment for the contents will be made out to you. However, the check or draft for the house may be payable to you and your mortgage holder if there is a mortgage on your house.
You may receive an advance check immediately after the disaster to cover such items as additional living expenses and clothing. It is important for you to keep receipts for all items purchased with this money because when the claim is finally settled, these expenses will be deducted. For example, clothing and personal property receipts will be deducted from the amount allowed for contents; living expenses (i.e. motel bills or temporary housing expenses) will be deducted from the amount allowed for additional living expenses.
It is beneficial for you to have an inventory, description, and replacement cost for your damaged items. You will need to list where you bought each item, how much you paid for it, and how much it will cost to replace. It may also be helpful to include brand names and model numbers if you know them. The more information you can supply, the better your adjuster will be able to assist with your claim. Do not throw out damaged furniture or other items of value. The adjuster will want to see them.
If you do not have or cannot locate a complete inventory, try to picture the contents of every room and then list and describe all the damaged or destroyed items. Include furniture, major appliances, electronics equipment, pictures or accessories in each room, as well as hobby items such as fishing or camping equipment, tools, other maintenance items and seasonal items such as holiday decorations and outdoor furniture. Finding out replacement costs may help speed up the settlement process.
Obviously, you should not endanger yourself or your family. If your home appears to be unsafe to live in, report this fact to the insurance company and reside elsewhere. You should make a list of all structural damage to property that you want to bring to the adjuster’s attention. If the company representative agrees the house is structurally unsafe, the company may hire a structural engineer to inspect your home. Your insurance provider may pay for the inspections.
However, if you and your contractor cannot agree with the company’s determination, you may have to pay the costs of a mutually agreed upon structural engineer to inspect the house. If possible, get written bids from reliable, licensed contractors. The bids should include details of the materials to be used and prices on a line-by-line basis. This information should make the claim process faster and easier.
If the structural engineer determines that the dwelling is repairable, the insurance company is obligated only for the repairs. If the dwelling is not repairable, the company will adjust your claim in accordance with your policy limits and will reimburse you for the cost of the inspections.
Insurance companies will most likely give top priority to critical facilities such as hospitals, police, and fire stations, and then to homes that were entirely destroyed. Depending upon the severity of your property damage, it may be some time before the company representative contacts you. In the meantime, you should take temporary measures to protect your property from further damage and begin listing all damaged items that you plan to report.
If it is necessary to vacate your home, be sure to report the address and phone number where you can be reached.
The type of policy you have will determine the replacement of household contents and other personal property. Most insurance policies pay the actual cash value – an amount equal to what the items were actually worth at the time they were damaged or destroyed. For example, it might cost $1,000 to replace your sofa at today’s prices. If the average useful life of a sofa is 20 years, and your sofa was 10 years old on the day it was destroyed, the company would pay you $500.
If you paid an extra premium for replacement cost coverage on your personal contents, the company will first pay you the actual cash value as described above. Once you have actually replaced the items and submitted your receipts, the company will then pay you for the difference. Using the above example, the company would initially pay you only $500 for your damaged sofa. After you buy the new one for $1,000, the company would then reimburse you another $500 – the difference between the actual cash value and the replacement cost. Some companies also use replacement services that will locate certain items, such as appliances, for you.
As you begin replacing damaged items, be sure to keep all receipts. It may be advisable to submit accumulated receipts to the company every two weeks or so, rather than sending them in one at a time. Most policies require that you replace the contents within a specified time period from the date of loss. If you cannot meet this time period, ask your company representative for an extension. You can also submit a claim for storage costs that you incur until your home is ready for occupancy.
Most homeowners policies place specific dollar limits on items such as jewelry, paintings, and silver, and will only pay the actual cash value of antiques (which may or may not be equal to their appraised prices). If you own these items and they are worth more than the basic policy limits, you have to purchase additional coverage to fully insure these items. If you have not done so, they may not be fully covered in your regular homeowners policy.
Illinois insurance regulations do not permit any check or draft from your insurance company to indicate “final payment” or “release of claim” unless the policy limits have been paid or the claim is being disputed. For example, if you forgot to list your Christmas decorations, but have already accepted a check, simply contact the company representative. Unless the company has paid the entire limits of your contents coverage, you are entitled to further reimbursement. It is not unusual for an insurance company to re-open a claim for additional payment. However, it is important that you file an accurate claim in a timely fashion.
Repair or replacement of your home will depend on the type of policy you have. If your policy pays actual cash value, the company will pay the cost to repair or rebuild your house minus depreciation. Companies use many different factors to determine how much to deduct for depreciation, but with an actual cash value policy, you should not expect to be reimbursed for the full amount of repairs.
Replacement cost policy – If you purchased a replacement cost policy, and have met the company’s “insurance to value” requirement (the actual cost in today’s market to replace your home), the company will first pay you the “actual cash value” as described above. Once the actual repair or rebuilding is completed, the company will then pay you the difference up to the policy limits. If you choose not to repair or rebuild, the company is obligated to pay you only the actual cash value. Many policies require you to rebuild at the same location, but you may be able to negotiate this requirement with the company representative.
Guaranteed replacement cost policy – If you purchased a guaranteed replacement cost policy, and have met the company’s “insurance to value” requirement (the actual cost in today’s market to replace your home), the company will pay the full cost to repair or rebuild your house, even if it is more than your policy limits. For example, if your policy limits are $100,000 and it costs $120,000 to rebuild your house, the company would pay the entire $120,000 under this type of policy. Some companies will only pay a certain percentage above your policy’s limit (e.g. 25%).
If your home costs more to repair/rebuild than your policy allows, you may want to ask representatives at the local disaster application center or the toll free disaster tele-registration hotline if you are eligible for financial assistance.
Your homeowners policy may cover the costs of meeting local/state building codes and ordinances when your home is repaired/rebuilt. Check with your agent to determine whether your policy includes a building code endorsement that will pay these expenses. In most cases, homeowners policies do not cover the expense of bringing a house up to code or meeting certain ordinances (including floodplain requirements) if the house did not meet these requirements when it was destroyed. If your policy does not cover these costs, check with the agencies at the local disaster application center to see if you are eligible for financial assistance.
Be cautious when hiring a contractor – make sure you are hiring someone reputable. Here are some things to consider when looking for a contractor:
Payment arrangements with your contractor should be handled carefully. Here are some things to consider regarding payment:
Ask your company representative if you are insured for “Additional Living Expenses.” This coverage will pay for costs you incur that exceed your normal living expenses. For example, if you normally spend $1500 per month for mortgage/rent, utilities, food, and transportation, and these living expenses increase to $2000 per month because of the disaster, the insurance company will reimburse you $500. Be sure to save all receipts.
You should also ask your company representative if there are any restrictions on amounts allowed for hotel rooms. If you stay with a relative or friend, the company may require proof of actual payments to reimburse your host for lodging. Extra expenses, such as higher utility bills, incurred by your host would definitely be considered.
Standard homeowners policies do not cover flood damage. However, if you have a flood insurance policy, your company or the National Flood Insurance Program will assign an adjustor to handle your claim.
If your home is not covered for flood damage, you should ask the representatives at the local disaster application center or the toll free disaster tele-registration hotline if you are eligible for financial assistance.
Standard homeowners policies do not cover damage due to mine subsidence unless you paid an additional premium for a mine subsidence endorsement.
Standard homeowners policies do not cover damage due to earthquakes unless you paid an additional premium for an earthquake endorsement. If you do not have earthquake insurance, any damage that can be directly attributed to the quake would not be covered.
If you purchased an earthquake coverage endorsement, your company will assign a representative to evaluate your damage. If you did not purchase earthquake coverage, you should ask the representatives at the local disaster application center or the toll-free disaster tele-registration hotline if you are eligible for financial assistance.
Homeowners insurance contracts generally have a stated deductible (e.g. $250) for claims such as fire and theft. The deductible for earthquake coverage is a stated percentage (e.g. 5%) of the amount of insurance you carry for each coverage under the policy.
If, for example, a homeowners policy provides $100,000 of coverage on the dwelling, $50,000 on the contents, and $10,000 on an unattached garage and the earthquake deductible is 5%, there would be an earthquake deductible of $5,000 on the dwelling, $2,500 on the contents and $500 on the unattached garage.
Since all insurance contracts are not the same, you should ask your insurance agent to review your policy and earthquake deductible.
Your car is not covered under your homeowners policy. If you have the appropriate comprehensive or collision coverages in your automobile insurance policy, your company should reimburse you for damage to your car just like any other auto claim. Check with your insurance agent.
We suggest that you contact your insurance producer and/or insurance company first. If you would like the Department of Insurance to assist you with a problem regarding your insurance company, you can file a complaint electronically or obtain a complaint form by calling one of the numbers listed below. Insurance analysts are available to answer general questions.
For more information about how our Department handles complaints, visit our Understanding the Complaint Process fact sheet.
This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.
Yes. Molds will grow where conditions allow. Molds require two things to grow – a food source and moisture. Food sources can be anything from dry wall and insulation to carpeting or mattresses. Moisture can come from many sources, including high humidity levels, leaky pipes or appliance hoses, neglected or inadequately repaired roofs, improperly maintained air conditioners, landscape and drainage problems, etc.
Yes. Indoor mold growth is unsanitary and undesirable. If you can see or smell mold inside your home, you should take steps to eliminate the cause and clean up and remove the mold.
If left unchecked mold growth can become more serious and may cause health-related problems and structural damage to your home.According to the Centers for Disease Control, exposure to mold does not necessarily result in a health problem. Molds have existed for thousands of years and there are over 100,000 kinds of mold. Most people touch, eat, or breathe some mold every day without ill effects. There is even mold in fresh air.
If mold growth is active, extensive, and persistent, it has the potential to cause health problems, the most common of which are allergic reactions such as wheezing, sneezing, coughing, eye irritation, etc.
While many people seldom experience ill effects from mold exposure, some individuals are more sensitive to molds than others. The same amount of mold may cause health problems in one person, but not in another. The Illinois Department of Public Health identifies those who may be at greater risk for more severe symptoms or illness as individuals with existing respiratory conditions such as allergies, asthma, or chemical sensitivities; individuals with weakened immune systems; infants and young children; and the elderly.It depends on what caused the mold and the policy coverage you have. Molds need water or moisture to grow, but not all causes of water damage are covered by homeowners insurance policies.
For example, standard homeowners policies do not cover water damage caused by “maintenance” problems, such as continuous or repeated water seepage or leakage, humidity or condensation problems, or landscaping or drainage problems. Homeowners policies also exclude water damage caused by floods. Therefore, if one of these water or moisture problems results in mold, it would probably not be covered by your policy.
Standard homeowners policies do cover some types of sudden and accidental water damage and/or mold, including burst pipes, and sometimes sewer back up or sump pump failure if you have that coverage. However, even if your policy covers these types of water damage, some companies have begun to specifically exclude or limit coverage for mold that results.
In Illinois, if mold results from water damage following a covered fire or lightning loss, the mold damage would be covered, and the total of all damages, including the mold, is subject to the full policy limit.
Read your policy and all endorsements. Some companies have taken steps to avoid or limit their exposure to mold claims by:
If you’re unsure whether you have mold coverage or the amount of coverage you have, contact your insurance agent or company for further explanations.
Regardless of whether your insurance pays for any mold claims, you should take steps now to prevent mold growth in your home due to maintenance issues, and act quickly when water damage and/or mold occur.
Since mold needs a food source and moisture to grow, the best thing you can do is to prevent moisture problems that allow mold to grow.
There are many sources of information listed at the bottom of this fact sheet that explain in more detail how to prevent moisture problems, but here are a few things to get you started:
Contact your insurance company right away to report the water claim even if you are unsure whether your insurance policy covers the water damage and/or resulting mold. Have your policy number handy and be prepared to answer questions about the extent and severity of the water damage.
You should take immediate action to protect your property and prevent mold growth that could cause further damage.
Mold can start to grow as soon as 24-48 hours after a water problem occurs. Mold will probably not grow if you clean up the water immediately and stop the source of the leak. Here are some steps you can take:
The Illinois Department of Public Health does not currently recommend mold testing since there are no standards about how much mold is acceptable.
In most cases, if you can see mold, don’t waste the time or money testing it. Instead, fix the source of the moisture problem, and clean up the mold.
If you are concerned about possible health risks from mold growth in your home, you should consult a physician. While experts agree that there is no current scientific evidence that links specific levels of mold to serious health problems, some individuals appear to be more susceptible to mold allergies and problems than others.
If your homeowners insurance policy provides coverage for mold-related loss, you and your insurance company will discuss the need for you or a family member to move out of the house. If you need to move out, discuss with your insurer how much money is available for additional living expenses (ALE) and whether that amount is in addition to other mold coverage. Additional living expenses are limited under most policies and only cover amounts over and above your normal living expenses.The Illinois Department of Public Health, the Centers for Disease Control (CDC) and the federal Environmental Protection Agency, as well as other authorities, have consumer brochures and web sites that explain how best to clean up mold from your home. See their contact information at the bottom of this fact sheet. However, here are some general tips:
First, make sure that the cause of the moisture or water problem has been permanently fixed. If it hasn’t, the mold growth may recur.
Currently, mold remediators are not required to be licensed and there are no standards or certifications for mold remediation specialists or other indoor air quality contractors. Because there is no state or federal oversight of these contractors, you should be cautious about signing contracts and avoid being taken advantage of by unscrupulous mold remediators. Here are some tips when choosing someone to clean up and remove any mold in your home:
The remediation and repair of your home can cost thousands of dollars. Therefore it is important to be selective in your choice of a mold remediation specialist.
www.idph.state.il.us/envhealth/pdf/moldmildew.pdf
www.idph.state.il.us/envhealth/factsheets/moisture.htm
Federal Emergency Management Agency (FEMA) Centers for Disease Control (CDC) U.S. Environmental Protection Agency (EPA)