Your home insurance is crammed with industry jargon and lawyers and isn’t exactly easy to read – but that doesn’t mean you should toss it without a peek in a drawer. After all, the words in this policy could mean the difference between having full coverage for a disaster or paying thousands of dollars to repair your home.
Below are some key terms to look out for when leafing through your home insurance, as well as tips on where to find the most important information.
“The good news is that policies can be dozens of pages long … key terms and coverage are at the top of the explanations page,” said Landy Liu, general manager of insurance products at Better, an online mortgage company.
The explanation page is tailored to your home and includes details such as property address, amounts insured, premiums and discounts that have been applied.
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Check the statements carefully to make sure everything looks correct, advises Steve Wilson, Senior Underwriting Manager at Hippo Insurance. If it doesn’t, contact your agent or carrier.
Another important detail to look out for on the explanation page: deductibles. This is the amount that you will be responsible for in the event of a claim.
For example, suppose a thunderstorm blows a tree on your home, causing $ 10,000 damage. With a $ 1,000 deductible, insurance pays $ 9,000 for repair costs.
More than one deductible may be listed on your declaration page, depending on the type of claim, says Angi Orbann, Vice President of Property and Personal Insurance at Travelers. For example, if you live on the coast, you may have a higher deductible for hurricane than for other claims.
The hurricane or storm deductible is often a percentage of your home coverage rather than a lump sum, Joseph Sanzo, property and casualty specialist at Barnum Benefit Advisors, said in an email. For example, if your home is insured for $ 250,000 and you have a 3% hurricane deductible, you are responsible for the first $ 7,500 of damage after a hurricane.
Your explanation page will tell you how much coverage you have, but it usually doesn’t explain what is not covered. For this information, look for sections of your policy with headings such as “Exclusions” or “Uninsured Damages”.
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You will likely find long lists of scenarios your insurance company does not cover, including major disasters like floods and earthquakes. If your home is at risk from these disasters, you can often purchase additional coverage, according to Orbann.
“Be proactive and speak to your insurance carrier,” says Wilson. “Is that a flood area? Are there any other coverage I might need? ”An agent can identify potential coverage gaps and help you address them.
A common way to close such loopholes is to get a confirmation that changes or adds to your insurance coverage.
For example, most standard homeowner insurance plans offer little to no coverage for damage from clogged drains or sump pumps, but you can likely add that coverage with a confirmation, says Wilson.
Confirmations are usually listed separately from the main body of your policy, often at the end.
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If you have valuable personal items – like an expensive engagement ring or an extensive art collection – they may not be fully covered by a standard homeowner’s policy. Insurance companies often list “special limits” or lower limits for certain types of personal property, Orbann says.
For example, jewelry theft can only be covered up to $ 1,000. Special limits also often apply to cash, silverware, furs, weapons and items used for business purposes.
If your property is worth more than the sublimits on your policy, contact your agent or freight forwarder to discuss additional coverage. An expert opinion may be required.
The “Terms” sections of your policy are worth looking at as they explain how to get the coverage you are entitled to. Wilson recommends reading these parts of your policy so that you understand what to do when you make a claim. If you don’t meet the conditions, your claim may be denied.
In addition to other requirements for filing a claim, your policy may provide that you:
Protect your property from further damage after a disaster.
Notify the police if your belongings are stolen.
Provide an inventory of the damaged or stolen items.
The terms sections often contain other important information, such as: B. Reasons why the company can cancel your policy.
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Still confused about your home insurance? An agent can help. “Talk to a professional who will do your best to guide you through the specifics of your situation,” says Liu.
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Sarah Schlichter writes for NerdWallet. Email: firstname.lastname@example.org.