Home Insurance: A Guide to Understanding your Policy
Deciphering all the information in your homeowner’s policy can seem a little overwhelming at first glance. Once you realize that most home insurance policies are laid out in a similar manner, making sense of it becomes a little easier. Here is some information you need to know that will help you with understanding your policy.
The declarations page or “dec sheet” summarizes your coverage and “declares” certain key points. This page contains vital information such as:
- Your insurance policy number
- Policy period
- Address of the covered property
- Amount of coverages and deductibles
- Amount of your premium, including any discounts that have been applied
As with any legal document, the terms depend a great deal on how certain words are defined. The definitions section of your policy includes some key words and phrases that can be used to resolve any issues that may arise. It’s important to note that the definitions listed in your policy may not be the same as what you would find for that same word in a dictionary. As such, it is essential for you to become somewhat familiar with the definitions provided to ensure you do not get caught off guard by any of them.
Section 1: Property Insurance
This section details what is and is not covered under your policy. In this part of your document, the different types of property coverage are spelled out, along with any limits for each one. The four different types of property coverage are:
- Your dwelling
- Other structures
- Personal property
- Loss of use (which covers how much you can be reimbursed if your home or outbuildings become uninhabitable)
The property insurance section will also list things such as:
- What kinds of incidents you are protected against (wind, fire, hail, theft, etc.)
- What if any exclusions are built into your policy
- Any conditions that must be met before coverage can kick in
Section 2: Liability Insurance
This section primarily deals with personal liability injury and medical payments to those who are injured while on your property. This type of coverage would take effect if someone slips and falls on your sidewalk or is bitten by your canine. The liability insurance section will list the amount of coverage you have, and will also explain certain exclusions from coverage. For example, your insurance company probably will not pay if you cause intentional harm to another person.
Many people never read their insurance policy, largely because they are unable to understand what is in it. Now that you know what your policy should contain, it’s time to take it out, dust it off, and read over it very carefully. We hope the above information will prove useful to you; however, if you still have questions you can always contact us.