Does anyone ever read their homeowners’ insurance policy details before renewing? One probably considers their home to be their most valuable asset, but do they have the right insurance? By reviewing the declarations page provided by their insurance company, one can review the fundamentals of their policy. It may seem overwhelming, but it is important that they understand their homeowner’s coverage as much as possible, so they know exactly what their premiums are paying for.
One should keep all of their insurance policy documents in a safe, easily accessible spot. This includes documents like their policy declaration, life insurance policy information, and their insurance contract.
This is a very important document that should be understood by every member of the insurance policy.
Sara Routhier, Director of Outreach at Clearsurance.com, lists the terms on the insurance policy contract one should pay close attention:
- Coverage for homeowners’ insurance
- Liability Coverage and their Premiums
- Coverage for personal property
- Tax deductions
- Limits of their policy
Now the question is how to read a homeowners declaration page. Here are the steps to reading their homeowners’ declaration.
What is a homeowners declaration page?
The homeowner’s insurance company will provide them with a summary of their coverage annually. Homeowners’ insurance policies are typically effective for 12 months at a time. The declaration page outlines what is covered under their policy agreement. One will want to keep their homeowners’ declaration page for their records. This document contains important information about them, the property they’re insuring and the coverage they’re getting. One may need to refer back to it when their policy expires or if they have any questions about their coverage limits.
In general, homeowners’ declaration pages contain the same information. They may be required as proof of insurance. They provide anyone with a breakdown of how to read a homeowners insurance declaration page, and what every section means.
One will find their policy number along with their name and mailing address on their homeowner’s insurance declaration page. Their name, policy number, and mailing address are the first things on their declaration page. One will also find their agent’s name, contact information, and their mortgagee’s address here. The property they are insuring on this policy will be included in this section. Verify that all the details on their declaration page are correct when they receive them.
It usually includes contact information for all the parties involved in their policy, including the named insured.
The coverage period information on their homeowner’s declaration page is important. It tells them when the policy will protect their property. One needs to know the policy’s expiration date in order to renew it before that date and prevent a lapse, which could result in an increase in the rate.
This section specifies the amount of coverage they have (such as coverage for their dwelling, personal property, liability, and guests’ medical protection), their premium amounts, and their deductible. A deductible determines how much one will have to pay before the homeowner’s insurance provider pays their claim. Also, it contains the policy number.
In Section I, they will find a breakdown of their property coverage.
Coverage A: Dwelling
The home structure is covered. The limits should cover the cost of rebuilding their home, but not the value of the land. The policy also covers structures attached to the house, such as decks. However, it won’t cover things like fences that are not attached to the building. Suppose the limits on the homeowner’s declaration page are $200,000 and $1,000. The insurance company will cover damage or replacement up to $200,000 if the damage is caused by a covered peril after one pays $1,000 to their insurer.
Coverage B: Other structures
A shed and the fence, for example, would be covered under this type of coverage if they are not attached to the home. This coverage is included in the dwelling premium on the sample homeowners insurance declaration page, marked “Incl.”.
Coverage C: Personal property
Essentially, this coverage type covers everything in their home, including the furniture and television. Some items with high value, such as fine art, jewelry, and expensive electronics, may have different coverage limits or require additional coverage. In the sample homeowners declaration, it is specified that the replacement value of the items is covered. The policy will either cover the replacement cost of the item or the actual cash value of the item. This is the value of a new item minus its depreciation, which is the value lost as a result of its age or wear and tear. The replacement cost is how much it will cost to replace the item that day.
Coverage D: Loss of use
As a result of a covered claim, one will typically be covered for living expenses such as food, hotel, clothing, and other necessities if they are required to stay somewhere other than their home. As shown on the sample homeowners declaration page, the insurance company covers living expenses up to $40,000.
Liability coverage types are displayed in Section II.
Coverage E: Personal liability
This coverage provides legal protection if they’re sued for an accident on their property. Typical limits range from $300,000 to $500,000.
Coverage F: Medical payments to others
A covered claim can cover up to $5,000 per person in medical expenses if someone gets injured on the property.
There is a rider for jewelry on this sample policy. The insurance company refers to these as endorsements or clauses. One can add coverage to their insurance policy or limit coverage with certain conditions with these. If the standard homeowner’s insurance policy does not cover high-value items like jewelry or fine art, homeowners may want to add a rider. Water damage coverage is not covered by an endorsement that limits coverage.
Insurer discounts may or may not appear on their homeowner’s declaration page. If so, they are listed in the discounts section.
There are no specifics on the homeowner’s insurance declaration page, such as what perils they’re covered for or whether their breed of dog is covered by liability coverage. Be sure to read the entire policy to make sure that they understand all the terms and conditions of their policy.
The local insurance agent can help them decide what coverage their insured property needs. Make sure they understand their homeowner’s declaration page. One should also check their homeowner’s insurance policy limits to see if the policy covers things like property damage.
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