New Hampshire Homeowners Insurance

New Hampshire homeowners insurance protects property owners from financial loss due to damage, liability, and loss of use—though unlike auto insurance, homeowners insurance is not legally required in the state.

Legal Requirements (or Lack Thereof)

No State Mandate

Key Fact: New Hampshire does NOT legally require homeowners insurance.

When Coverage is Required

Mortgage lenders require:

• Coverage equal to loan amount or replacement cost
• Lender listed as mortgagee/loss payee
• Continuous coverage throughout loan term
• Notification of cancellation or non-renewal

If paid off:

• No legal requirement to maintain insurance
• HIGHLY recommended for financial protection
• Most homeowners maintain coverage voluntarily

Exam Tip: While New Hampshire law doesn't require homeowners insurance, mortgage lenders do. Understand the distinction between legal requirements (state law) and contractual requirements (lender terms).

Standard Policy Forms

New Hampshire uses ISO (Insurance Services Office) standard homeowners forms:

HO-3 Special Form (Most Common)

The HO-3 is the most popular homeowners policy in New Hampshire:

Policy Form Comparison

Coverage A - Dwelling

Covers the home structure including:

Included:

• Foundation, walls, roof
• Attached garage
• Built-in appliances
• Plumbing, heating, electrical systems
• Permanently installed fixtures
• Materials on premises for construction/repair

Excluded:

• Land (not insurable)
• Detached structures (covered under Coverage B)
• Personal property (covered under Coverage C)
• Business property (needs commercial policy)

Coverage B - Other Structures

Covers detached structures on premises:

Covered Structures:

• Detached garage or carport
• Storage sheds and barns
• Fences and retaining walls
• Swimming pools
• Guest houses (if not rented)
• Driveways and walkways

Standard Limit: 10% of Coverage A Example: $300,000 Coverage A = $30,000 Coverage B

Coverage C - Personal Property

Covers belongings anywhere in the world:

Covered Property:

• Furniture, clothing, electronics
• Appliances (not built-in)
• Tools and equipment
• Jewelry (subject to sublimits)
• Sports equipment
• Personal items

Special Limits Apply To:

Scheduled Personal Property: For high-value items exceeding sublimits, add scheduled coverage with appraisals.

Coverage D - Loss of Use

Pays additional living expenses when home is uninhabitable:

Additional Living Expense (ALE):

• Hotel/temporary housing costs
• Restaurant meals (above normal food costs)
• Storage of belongings
• Moving expenses
• Pet boarding

Fair Rental Value:

• If renting part of home
• Lost rental income while repairs made

Standard Limit: 20-30% of Coverage A Time Period: Until home is repaired or household resettled

Exam Tip: Coverage D pays the DIFFERENCE between normal living expenses and additional costs. If you normally spend $200/month on food and spend $600 while displaced, Coverage D pays $400.

Coverage E - Personal Liability

Protects against lawsuits for bodily injury or property damage:

Covered Situations:

• Guest injured on your property
• Your dog bites neighbor
• Tree falls on neighbor's property
• Child breaks neighbor's window
• Someone injured by your actions

Coverage Includes:

• Legal defense costs (in addition to limits)
• Settlements or judgments
• Court costs and attorney fees

Standard Limits: $100,000, $300,000, or $500,000 per occurrence

Excluded:

• Business activities (need commercial policy)
• Professional services (need professional liability)
• Intentional acts
• Contractual liability
• Motor vehicle liability (covered by auto policy)

Coverage F - Medical Payments

No-fault coverage for minor injuries to others:

Characteristics:

• Pays regardless of liability
• Covers medical expenses for others
• Applies to injuries on your property
• Applies to injuries caused by you or family members elsewhere
• Small limits ($1,000 - $5,000)

Purpose: Settle minor claims without lawsuit

New Hampshire-Specific Coverage Considerations

Weather-Related Perils

New Hampshire's climate creates unique insurance considerations:

Ice Dam Coverage

Ice Dam Formation:

1. Snow on roof melts from heat escaping home
2. Water runs down to cold eaves
3. Refreezes creating ice dam
4. Water backs up under shingles
5. Leaks into home causing damage

Coverage Application:

• Interior water damage from ice dams: COVERED
• Prevention (roof raking): NOT COVERED
• Gutter damage from ice: COVERED
• Insulation improvement: NOT COVERED

Frozen Pipe Coverage

Coverage Requirements:

• Policyholder took reasonable steps to prevent freezing
• Maintained heat in home
• Drained pipes if leaving property vacant
• Winterized properly if home unoccupied

Not Covered If:

• Left home unheated in winter without draining pipes
• Failed to take reasonable precautions
• Property vacant without proper winterization

Exam Tip: New Hampshire's harsh winters make frozen pipe and ice dam claims common. Coverage applies only if the policyholder takes reasonable care to prevent freezing.

Replacement Cost vs. Actual Cash Value

Replacement Cost Coverage

Definition: Cost to repair or replace with similar property WITHOUT deduction for depreciation

New Hampshire Requirement: Insurers must offer replacement cost coverage on dwelling (Coverage A)

Advantages:

• Full cost to rebuild home
• No depreciation deduction
• Better financial protection
• Required offering in NH

Requirements for Full Payment:

• Carry insurance equal to 80% or more of replacement cost
• Actually repair or replace damaged property
• Complete repairs within reasonable time

Actual Cash Value (ACV)

Definition: Replacement cost MINUS depreciation

Formula: $\text{ACV} = \text{Replacement Cost} - \text{Depreciation}$

When Applied:

• Personal property (Coverage C) unless endorsement purchased
• Older roofs (may have ACV settlement)
• If carrying less than 80% of replacement cost

Example:

• Replacement cost of roof: $12,000
• Roof is 15 years old (halfway through 30-year life)
• Depreciation: 50%
• ACV payment: $12,000 - $6,000 = $6,000

80% Rule (Coinsurance)

To receive full replacement cost benefits:

Requirement: Carry insurance equal to at least 80% of replacement cost

Formula: $\text{Payment} = \frac{\text{Insurance Carried}}{\text{Insurance Required}} \times \text{Loss} - \text{Deductible}$

Where Insurance Required = Replacement Cost × 80%

Example 1: Adequate Insurance

• Home replacement cost: $400,000
• Insurance required: $400,000 × 80% = $320,000
• Insurance carried: $350,000 ✓
• Loss: $80,000
• Payment: $80,000 - deductible (FULL replacement cost)

Example 2: Under-Insured

• Home replacement cost: $400,000
• Insurance required: $320,000
• Insurance carried: $240,000 (only 60%)
• Loss: $80,000
• Payment: ($240,000 ÷ $320,000) × $80,000 = $60,000 - deductible

Exam Tip: The 80% rule penalizes under-insurance. Carrying only 60% of required coverage means receiving only 75% of loss amount (before deductible). Always maintain at least 80% to replacement cost.

New Hampshire Claims Handling Requirements

Prompt Communication

Insurer Obligations:

Claims Investigation

Insurer Must:

• Conduct thorough investigation
• Document all findings
• Communicate with policyholder regularly
• Explain coverage determinations clearly
• Pay claims fairly and promptly

Policyholder Must:

• Report claim promptly
• Cooperate with investigation
• Provide requested documentation
• Allow property inspection
• Protect property from further damage

Unfair Claims Practices

New Hampshire prohibits:

Consequences:

• Consumer complaint to NHID
• Investigation and potential discipline
• Fines and penalties
• Requirement to pay claim plus interest
• Market conduct examination

Exam Tip: New Hampshire requires insurers to acknowledge claims within 15 days and begin investigation within 30 days. Failure to handle claims promptly is an unfair claims practice subject to regulatory action.

Exclusions and Limitations

Standard Exclusions

All New Hampshire homeowners policies exclude:

Water Damage Distinctions

COVERED Water Damage:

• Burst pipes
• Appliance overflow
• Ice dam water intrusion
• Roof leak from wind/hail
• Water heater rupture

EXCLUDED Water Damage:

• Flood (rising water from outside)
• Surface water
• Groundwater seepage
• Sewer backup (unless endorsement purchased)
• Gradual leaks (maintenance issue)

Exam Tip: The key distinction is SUDDENNESS. Sudden water damage (burst pipe) is covered. Gradual water intrusion (slow leak over months) is excluded as a maintenance issue.

New Hampshire Flood Insurance

NFIP (National Flood Insurance Program)

Availability:

• Available in participating NH communities
• Maximum $250,000 dwelling coverage
• Maximum $100,000 contents coverage
• Separate policy required
• 30-day waiting period (except at closing)

Who Needs Flood Insurance:

• Properties in Special Flood Hazard Areas (SFHA)
• Federally-backed mortgage in flood zone
• Anyone concerned about flood risk (optional otherwise)

Private Flood Insurance

Recent Development:

• Private market flood insurance now available
• May offer higher limits than NFIP
• May be more expensive or less expensive
• More flexible coverage options
• Immediate coverage available (no 30-day wait)

Comparison:

New Hampshire Flood Risk

Higher Risk Areas:

• Coastal regions (Portsmouth, Hampton, Seabrook)
• Connecticut River valley
• Merrimack River basin
• Areas near lakes and ponds
• Low-lying areas

Exam Tip: Standard homeowners policies EXCLUDE flood coverage. Properties in Special Flood Hazard Areas with federally-backed mortgages must purchase separate flood insurance through NFIP or private market.

Endorsements and Optional Coverages

Common Endorsements

Scheduled Personal Property

For High-Value Items:

• Jewelry, watches, furs
• Fine art, antiques
• Musical instruments
• Collections (coins, stamps)
• Cameras and equipment

Benefits:

• No deductible
• All-risk coverage
• Agreed value
• Worldwide coverage
• No sublimits

Requirements:

• Professional appraisal
• Item listed on schedule
• Additional premium

Exam Tip: Scheduled personal property endorsements provide "all-risk" coverage without deductibles. Standard policies have sublimits ($1,500 for jewelry, $2,500 for firearms, etc.) that scheduled coverage removes.