If you’re a homeowner, you probably have a home insurance policy
And you probably think you have coverage for a myriad of incidents – or “perils” – that result in damage to your property. And you very well may, but which ones, how much is covered, and what might be paid to you as a result of a claim – can vary widely. Let’s review some of the most common misconceptions about what’s in a home insurance policy.
What Differences Set Homeowner’s Policies Apart?
That first thing you should know is that not all home insurance policies are the same. While many are built around the same set of “forms”, that doesn’t mean that they all include the same language. Insurance policies can have exclusions, schedules, and many other sets of language that can alter the coverage of those “standard” forms. You should read through your policy – and discuss it with your agent – before you assume what is or isn’t included or excluded. That being said, here are some things to look for as you review:
Named Peril vs. Open Peril:
A peril is a cause of loss (e.g., fire, wind, theft, etc.) that could result in a claim. Some policies have “open perils” coverage, which means all perils are covered unless they are specifically excluded in the policy. Other policies may name the perils, which means they must be listed in order to be covered.
Replacement Cost vs. Actual Cash Value (ACV):
How your claim is paid can be just as important as if it is covered. A policy that pays Actual Cash Value, or ACV will typically only pay you for the value of the damaged property – less depreciation. On a replacement cost policy, you will typically receive the amount that is needed to replace the property at the current price. Some insurance companies even have another determination, called market value, that may pay an adjusted amount based on multiple factors.
Flood Coverage:
Most property insurance policies do not include coverage for losses that occur from flooding. In addition, most flood policies cover a single structure and do not include contents. So, if your home floods, you would need some add-on coverages:
- A flood policy that covers your structure
- A flood policy that covers the contents of your home
- And a flood policy that covers any separate structures like a detached garage, shed, etc.
Scheduled Property:
If you have collections, jewelry, firearms, watercraft, etc., you may have some coverage for them on your home insurance policy. But how much? There is typically a limit on these amounts of coverage, and it may not be what you need if you have a large loss. Listing valuable items individually – called a schedule – can help ensure they are fully covered.
As you can see, there is a lot to consider when insuring your home! We would be happy to review your policy and help you understand what may – and may not – be covered. It’s what our agents are here to do!