Your home insurance policy is full of industry jargon and legalese, but that doesn’t mean you should throw it in a drawer without reading it. After all, the language in that policy could mean the difference between being entirely insured for a calamity and having to pay thousands of dollars on your own to rebuild your house.
Here are some crucial home insurance terms to look for while reviewing your policy, as well as recommendations on where to discover the most important information.
Declarations
The best place to start is with the homeowners insurance declarations page, which is a personalized summary page for your house. It is normally located at the beginning of your policy materials.
The declarations page includes information such as the property address, coverage levels, premium, and discounts that have been applied. It also includes the dates when your insurance begins and finishes.
Steve Wilson, director of technical underwriting at Hippo Insurance, recommends that you carefully review the declarations to ensure that everything appears to be proper. If not, please contact your agent or carrier.
Deductible
Another important element to look for on the declarations page is your home insurance deductible. This is the amount you are liable for in the event of a claim.
Assume a thunderstorm sweeps a tree onto your home, incurring $10,000 in damage. If you have a $1,000 deductible, the insurance company will cover $9,000 of the repair costs.
Depending on the type of claim, your declarations page may include multiple deductibles, according to Angi Orbann, Travelers’ vice president of property and personal insurance. If you reside near the coast, you may have a larger hurricane deductible than for other types of claims.
In an email, Joseph Sanzo, a senior insurance specialist at Barnum Benefit Advisors, said that hurricane or windstorm deductibles are frequently a percentage of your dwelling coverage rather than a fixed amount. For example, if your home is insured for $250,000 and you have a 3% hurricane deductible, you will be responsible for the first $7,500 in damage after a hurricane.
Exclusions
Your declarations page will specify how much coverage you have, but it will rarely describe what is not covered. Look for portions of your policy with headers such as “exclusions” or “losses not insured.”
You’ll most certainly find extensive lists of eventualities that your insurance company will not cover, including big calamities like floods and earthquakes. If your house is at risk from these disasters, Orbann says you may usually purchase additional coverage.
“Be proactive and talk to your insurance carrier,” she advises. Is this a flood-prone area? Are there any other coverages that I may require?”
An agent can assist you identify and fill any potential coverage gaps.
Endorsements
One frequent method for addressing such gaps is through an endorsement, which increases or adds coverage to your insurance.
For example, most standard homeowners insurance policies provide little to no coverage for damage caused by clogged drains or sump pumps, but Wilson says you can usually add it through an endorsement.
Insurers normally provide endorsements separately from the main language of your policy, usually near the conclusion.
Special limits
If you own valuable personal belongings such as a costly engagement ring or a large gun collection, a standard homeowners insurance policy may not cover them. Insurance companies frequently have “special limits,” or sublimits, for specific types of personal property, according to Orbann.
For example, jewelry theft may only be covered up to $1,000. Special restrictions frequently apply to cash, silverware, furs, firearms, and objects used for business purposes.
If your items are worth more than the sublimits in your policy, speak with your agent or carrier about acquiring more coverage.Â
Conditions
The “conditions” part of your insurance is worth reading because it explains how to acquire the coverage you’re entitled to. Wilson suggests reading these sections of your policy to ensure you understand what you need to do when filing a claim. If you do not meet the requirements, your insurer may deny your claim.
For example, your policy could state that you must:
- Protect your property from further damage after a disaster.
- If someone steals your goods, notify the police.
- Provide a list of damaged or stolen items.
Other important information, including reasons why the company may cancel your insurance, can frequently be found in the conditions sections.
