Combining Coverage

Jan 6, 2005
Contributor: joel randon

Buying a combination of two or more types of coverage, or "package policy," can help keep costs down. The Homeowner's Policy Program provides liability automatically in addition to the property coverages. By combining property and liability coverages, the insurance company is able to reduce processing costs, determine losses more accurately, and pass these savings on to the consumer in the form of lower premiums.

For most homeowner's forms, a principal amount of insurance is selected for the dwelling. Reasonable amounts of coverage are then automatically provided for other coverages based on a percentage of the amount provided for the dwelling.

These reasonable amounts are not the maximum amounts available; they are simply limited amounts of coverage that satisfy the average needs of most homeowners. If a particular person has a greater exposure, greater amounts of insurance may be purchased.

For example: You have $10,000 of coverage for other structures based on the amount of insurance written for your dwelling. If your four-car detached garage has a replacement cost of $30,000, you may need to purchase more "other structures" coverage--in which case, an additional premium will be charged.

Under HO-4 and HO-6, the principal amount of insurance is selected for personal property--and a reasonable amount of coverage is automatically included for other coverages, based on a percentage of this amount.

For more information relating to "Combining Coverage ", please visit our liability insurance Combining Coverage page.

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