Isn’t it fun getting those 70 page Insurance Policies in the mail? Said no one ever! As an Independent Insurance Agent, we get overwhelmed too, with all the insurance carriers we work with and all of the various types of policies. We read every single policy document we sell because they are all different and we strive to be as educated as possible on every different form. Different wording. Different limitations. Different exclusions.
My father, who was my Insurance Guru, mentor and teacher who gave me a few tips that has helped me get through these documents in less time and with more accuracy. Because not only do you need to know how to read your policy but be sure your home and property are covered properly. But let's start with your actual policy - here are a few tips to disect your homeowners policy.
Disecting Your Homeowners Policy
- DECLARATION PAGE – this is the page of your policy that gives you the policy number, dates of coverage, types of coverage and coverage limits. You will also find other information on this page such as your mortgage company or lienholder information and endorsement numbers.
- POLICY DOCUMENT – This is the larger part of the package. In this document you will find who is covered, what is covered and what is not covered.
- AGREEMENT – This is usually a short paragraph that describes the agreement you have entered into with the insurance company. Your Insurance Policy is absolutely a contract between you and the company.
- DEFINITIONS – Very important reading. This section defines who is covered and what is covered and how the policy is written using specific wording.
- PROPERTY COVERAGES – In this section you will find specific information regarding which property is covered. You will also find information regarding which property is NOT covered on the policy.
- PERILS INSURED AGAINST – This section explains which perils are covered on the policy such as theft, fire etc.
- EXCLUSIONS – This is one of the fun portions of the policy document. This sections tells you which perils are excluded from coverage. FYI, Flood losses are specifically excluded from Homeowners Policies. All Flood Insurance is written separately.
- CONDITIONS – This section explains the conditions of your agreement with the insurance company.
- DUTIES AFTER LOSS – Everyone needs to read this section. As part of your agreement with the insurance company, there are specific steps you need to take after you have suffered a loss such as protecting your property from further damage.
- LOSS SETTLEMENT – This section explains how your loss will be paid by the insurance company.
- LIABILITY COVERAGES & MEDICAL PAYMENTS– This section describes in detail what constitutes a covered liability and/or medical claim and what doesn’t.
- ENDORSEMENTS & EXCLUSIONS – Possibly the most important part of any policy. The policy document giveth and the endorsements and exclusions taketh away. I usually read the endorsements and exclusion documents first. There are documents labeled “Special Provisions” that change the policy wording and exclusion forms that specifically exclude certain perils. There are also Endorsements that ADD coverage to your policy.
An example of how to read your policy
Let’s say your brother is staying in your home while he is on vacation. There is a burglary and some of your brother’s things are also stolen. Will you have coverage for your brother’s things?
First, look at the DEFINITIONS section of your policy. This will tell you who is covered. Then go to the PERILS INSURED AGAINST where you will check to see if burglary and/or theft is covered. Then go to your DECLARATION PAGE to see what dollar amount of coverage you have for Personal Property. Next you want to find your Deductible amount on the DECLARATION PAGE.
So, according to the Policy example, your brother would be covered for his stolen personal property. You would be covered for your stolen personal property and any damage done to your home during the burglary. Let’s say your Personal Property limit is $100,000 and your deductible is $1,000. For this loss, you would be covered up to $100,000 for this loss in total, less $1,000. This would include your brother’s personal property. If your policy is endorsed to cover for replacement cost of personal property, you will be paid the depreciated value of each item at the time of loss. You would then be reimbursed the difference between depreciated value and replacement cost when each item is replaced.
Who, What, Where & How
Just remember this……. who, what, where, how. Who is covered. What is covered. Where does coverage apply. (most Homeowners Policies will offer a limited amount of personal property away from your residence) How much is covered and how much will I be responsible for?
It really is important for you to sit down and read your policies. The days when all policies were the same are over. There is now a basic form and every company can and does make changes to the basic form with endorsements and exclusions.
When all else fails and your eyes have crossed and you just don’t understand what you are reading, contact Harbour Insurance Services at (281) 520-4090 for clarification or to review your policies with you. That’s what we’re here for. :-) We like going over insurance policies annually to review and be sure you are covered properly so this would be a good time to be sure you understand what you are paying form.
Jan and staff