How to Read and Interpret Your Homeowners Insurance Policy
By Jan Laman, Harbour Insurance Services
Isn’ t it fun getting those 70 page Insurance Policies in the mail? Overwhelming? As an Independent Insurance Agent, I get overwhelmed too. 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 gave me a few tips that has helped me get through these documents in less time and with more accuracy. I am now going to give you a few secrets.
DISECTING YOUR HOMEOWNERS POLICY
1. 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.
2. 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.
3. 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.
4. DEFINITIONS – Very important reading. This section defines who is covered and what is covered and how the policy is written using specific wording.
5. 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.
6. PERILS INSURED AGAINST – This section explains which perils are covered on the policy such as theft, fire etc.
7. 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.
8. CONDITIONS – This section explains the conditions of your agreement with the insurance company.
9. 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.
10. LOSS SETTLEMENT – This section explains how your loss will be paid by the insurance company.
11. LIABILITY COVERAGES & MEDICAL PAYMENTS – This section describes in detail what constitutes a covered liability and / or medical claim and what doesn’ t.
12. 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.
MOMENTUM / February 2017 29