6 Important Terms to Know in Your Homeowners Policy

Your house insurance policy may be filled with business jargon and legalese, but that doesn’t mean you should chuck it in a drawer without reading it. After all, the phrases in that policy might be the difference between being fully insured in the event of a calamity and having to spend thousands of dollars to rebuild your property.

Here are a few key phrases to look for while reviewing your homeowners insurance, as well as some pointers on where to locate the most important information.

Declarations
“The good thing is that, although policies might be dozens of pages lengthy,” says Landy Liu, general manager of insurance products at Better, an online mortgage provider, “the most significant terms and coverage levels are placed at the beginning on the declarations page.”

The declarations page is tailored to your house and includes information like as the address, coverage levels, premium, and discounts that have been applied.

Steve Wilson, senior underwriting manager at Hippo Insurance, recommends carefully reviewing the statements to ensure that everything seems to be proper. If not, please contact your agent or carrier.

Deductible
Another important item to check for on the declarations page is deductibles. In the case of a claim, this is the amount you must pay.

Assume a thunderstorm knocks a tree down on your home, incurring $10,000 in damage. If you have a $1,000 deductible, the insurance company will pay $9,000 toward the cost of repairs.

Depending on the kind of claim, your declarations page may have more than one deductible, according to Angi Orbann, vice president of property and personal insurance at Travelers. If you reside near the coast, for example, you may have a larger storm deductible than you have for other claims.

According to Joseph Sanzo, a property and casualty expert with Barnum Benefit Advisors, hurricane or windstorm deductibles are often a percentage of your dwelling coverage rather than a set sum. For example, if your property is insured for $250,000 and you have a 3% hurricane deductible, you will be liable for the first $7,500 in damage during a storm.

Exclusions
Your declarations page will clarify how much coverage you have, but it will not usually disclose what isn’t covered. Look for portions of your policy with headers like “exclusions” or “losses not covered” for such information.

You’ll almost certainly see a long list of eventualities that your insurance provider will not cover, including big calamities like floods and earthquakes. Orbann explains that if your house is at danger from these calamities, you may frequently acquire extra coverage.

“Be proactive and communicate with your insurance company,” Wilson advises. “Does this place have a high risk of flooding?” Is there anything more I should look into?” An agent can help you discover any coverage gaps and fill them.

Endorsements
An endorsement, which increases or adds coverage to your policy, is a frequent solution to remedy such gaps.

For example, most conventional homes insurance policies give little to no coverage for damage caused by clogged drains or sump pumps, but Wilson says you can usually add this coverage via an endorsement.

Endorsements are often included aside from the policy’s primary language, frequently towards the conclusion.

Special restrictions
A conventional homeowners insurance may not properly cover significant personal possessions such as a fancy engagement ring or big art collection. According to Orbann, insurance firms often offer “special limitations,” or sublimits, for certain categories of personal property.

For example, jewelry theft may only be covered up to $1,000. Cash, silverware, furs, firearms, and things used for business are often subject to special restrictions.

If the value of your goods exceeds the policy’s sublimits, contact your agent or carrier to consider getting more coverage. An evaluation may be necessary.

Conditions
The “conditions” portions of your insurance are important to read since they explain how to get the coverage you are entitled to. Wilson suggests reviewing these sections of your policy so you know what you need to do when submitting a claim. If you do not satisfy the requirements, your claim may be refused.

Among other requirements for filing a claim, your policy may state that you must:

• After a calamity, protect your property from additional harm.
• If your things are taken, call the police.
• Make a list of any items that have been damaged or stolen.

Other important information, such as the reasons the company may cancel your policy, is frequently included in the conditions section.

Are you still unsure about your homeowners insurance policy? An agent can assist you. “Speak with a professional, someone who is looking out for your best interests, to walk you through the specifics of your situation,” Liu advises.