Insurance is used to protect your person or property in case of loss. In terms of a disaster, having insurance for your home or property is the best way to ensure that you have the financial resources needed to help repair, rebuild or replace your lost or damaged property after a disaster. However, not all insurance carriers and policies are the same, but each policy document does have some common features.
So here are some tips on what to look for in your policy to make sure your property is covered ahead of the next disaster.
But first, do you have a copy of your homeowner’s insurance policy or just the declaration’s page? How do you know?
(A) The Policy is about a 25-page document, and you would know if you had it. It contains all the terms and conditions of your insurance coverage and the explanations of those terms.
(B) The Declaration Page is a 1–2-page summary of your insurance policy. Its major components include: your policy number, the types and amounts of your coverage and limits, your deductibles, your premium and your basic property information like your address.
Now that you know or have an idea of what document you have, what is next? Well, Declaration Page only individuals, first thing you should do is contact your local insurance agent and request a copy of your full policy of coverage. While having the Declaration Page can provide an idea of what is covered, it is always better to have the full policy so that you can read and find the potential holes in your coverage.
Now that you have your policy, here is what to look for.
As you will find on your Declaration Page, your policy covers multiple things and for each of these coverages, there are ‘limits.’
The Limits are the maximum amounts of money, pending very few exceptions, that your insurance company will provide to you, or reimburse to you, for the repair or replacement of your lost or damaged property, that is covered by your policy, per claim.
NOTE: NOT ALL PROPERTY OR ‘EVENTS’ ARE AUTOMATICALLY COVERED
What is covered? 4 Main Coverage Types:
Dwelling
This is your home, the structure you live in.
If a covered event under your policy causes damage to your home, this is what coverage is where the money to repair or replace the home comes from.
Other Structures or Dwelling Extension
This is NOT your home, but a tool shed, not directly attached to your home, that is owned by you and on the same land as your home.
Just like the dwelling, if a covered event causes damage to your other structures, this is where the money comes from.
Personal Property
This covers the contents of your home and/or other structures, at the time of the damage causing event.
Loss of Use
This coverage kicks in in the event the damage causing event renders your home unfit to live in.
This is often termed ALE or ‘additional living expenses,’ and it covers hotel and/or rental home expenses accrued if, for example, you must evacuate your home.
These coverage types are typical of most homeowner’s insurance policies, and it is highly advised that you have at least these 4 before disaster strikes.
Besides the main coverage types, there are some key terms you should look for within the policy.
Exclusions and Endorsements
Every policy has Exclusions, and they are most often in list form. So, look at this list to find out what situations your property will not be covered in.
- For example, in Louisiana, many homeowner’s insurance policies specifically exclude flood damage, and you are required to purchase a separate flood insurance policy.
On the other hand, not all policies have Endorsements. Endorsements or add-ons to a home insurance policy allow you to customize the policy to best fit your unique and individual needs based on your lifestyle or geographic location.
- For example, in Louisiana, a typical add-on you are likely to need is windstorm coverage. Unlike hurricane or named storm coverage, windstorm add-ons cover unnamed storms that cause damage resulting from winds, hail, and other gusty hazards.
REMEMBER, every policy is different. So, if you ever want more information specific to your policy, contact your local insurance agent. It is their job to educate you on your policy and answer all your questions.