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How well do you know your homeowner’s insurance policy?

hoa pictureWith the New Year beginning, many people are setting goals related to personal finances, which makes this a great time to review your homeowner’s policy with your agent to ensure you have the coverage needed to protect you, your family and your belongings.

As a homeowner, it is important to know what your policies cover and don’t cover. To begin this task, one must understand what is actually included in an insurance policy. Your homeowner’s policy generally consists of the following items:

1. Declarations Page
2. Definitions
3. Section I (property insurance)
4. Section II (liability insurance)

The Declarations Page of your policy (usually the first page) presents information unique to your situation, a summary of your coverage. It is still important to read your policy in full to understand the details of your coverage. The Declarations Page contains the following items:

• Policy number
• Policy period (beginning and end dates of coverage)
• Name and address of the primary insured (usually you and your spouse, if married)
• Name and address of your insurance agent
• Location of the insured premises (usually by street address)
• Mortgagee’s name and address (i.e., the bank or mortgage company that holds your home loan)
• Coverage limits for each coverage type
• Deductible amount
• Premium amount
• The title or number of any endorsements affecting the policy

The definitions part defines terms and explains important concepts contained in your insurance policy. If a policy definition differs from normal usage for a term, the definition in the policy prevails.

 

Section I – Property Coverage

Section I of your policy describes what is and isn’t covered by the property provisions of your homeowner’s policy. It explains the types of property coverages, lists the specific perils that you’re insured against (such as damage caused by fire, theft, and hail), describes the exclusions from coverage (provisions that eliminate coverage for specified exposures), and conditions that you must meet for coverage to apply.
There are four categories of property coverage:

• Coverage for your dwelling
• Coverage of other structures on your property
• Coverage of your personal property
• Coverage for the loss of use of your property

If an instance of damage, injury, theft, or expense falls within one of these categories, you’ll be covered by your policy as long as you’ve met the conditions of your policy and no exclusions apply. Qualifying for coverage under the policy means that Access Home Insurance Company (Access Home) will reimburse you for your financial loss, up to your specific coverage limit. In some cases, you may increase your coverage limits for an additional charge; please contact your agent for more information.

Section II – Liability Coverage

Like Section I, Section II of your policy describes types of coverages, exclusions from coverage, and conditions that must be satisfied. This section focuses on personal liability and medical payments to others for certain bodily injuries and property damages suffered by others in connection with your property.

How much will you receive after a loss?

Your policy contains a paragraph describing how the amount you can expect to receive from Access Home will be determined if a covered property loss occurs. The most common options for calculating payments are the following:

Replacement cost: This is the amount needed to replace or rebuild your property or repair damages using similar materials to what you had before.

Actual cash value: This is the amount needed to replace or rebuild your property, less depreciation.

Keep in mind that you’ll need to satisfy a deductible (i.e., pay a certain amount out of pocket) before Access Home reimburses you for a loss.

Please note: The above information defines what is typically found in most homeowner policies. The terms and conditions of your specific policy may vary. For a listing of key insurance terms, visit Key Info on our website.

Your agent can also help evaluate your coverage. If you don’t currently have an Access Home residential homeowner’s policy and would like more information ask your agent or go to Find an Agent on our website.

 

Resources: Property and Liability Insurance Principles, AICPU; FAIA General Lines Agent and CSR Manual