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Reading A Policy

A homeowner's policy is broken into sections that outline coverages, amounts, deductibles, additional coverings, discounts, and the total premium cost. It covers dwelling protection, other structures, personal property, loss of use, personal liability, and medical payments to others but not floods, earthquakes, normal wear and tear, mold, foundation issues, or maintenance. Renter's insurance similarly covers personal belongings, additional living expenses, and liability but not the building itself. Both types of insurance help financially when disasters occur but coverage varies between insurers so shopping around is advised.

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Kian Grimaldo
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52 views2 pages

Reading A Policy

A homeowner's policy is broken into sections that outline coverages, amounts, deductibles, additional coverings, discounts, and the total premium cost. It covers dwelling protection, other structures, personal property, loss of use, personal liability, and medical payments to others but not floods, earthquakes, normal wear and tear, mold, foundation issues, or maintenance. Renter's insurance similarly covers personal belongings, additional living expenses, and liability but not the building itself. Both types of insurance help financially when disasters occur but coverage varies between insurers so shopping around is advised.

Uploaded by

Kian Grimaldo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

Reading a policy

A homeowner’s policy is typically broken down into sections. The first section spells out coverages and
amounts of insurance. You’ll likely see coverage explained in line items, with the coverage type and
amount of insurance detailed. For example, the first section will include information about:
Dwelling protection
Other structures protection
Personal property protection
Loss of use protection
A subsection to the coverage information may include details about:
Personal liability
Medical payments to others
The second section spells out the deductibles and how much you’ll need to pay out of pocket if you file a
claim. Section three details information and costs about other coverages, such as riders for jewelry or
collectibles.
Section four may detail if your insurance offers any credits or discounts. Some common homeowner
discounts include:
Security system
Combining an auto and home policy
Claims-free discount
The last section will calculate the total policy premium cost, detailed by month, quarter, or annual price by
adding up all the credits, discounts, optional coverage, and state taxes or surcharges, if applicable.
Read your policy carefully, especially when it comes to covered perils that are considered acts of God.
Most severe weather impacts are considered acts of God, but not every storm impact is covered.
What is renter’s insurance?
You may not own your home, but you may still need to get renter’s insurance, as some landlords require
coverage.
Renter’s insurance usually includes coverage for:
Your belongings. This includes if they are stolen out of your car, taken while off premises, or damaged
because of named perils.
Additional living expenses. If you have to move out of your apartment because of damage from a covered
peril, this covers the extra cost of food, rent, and other expenses.
Personal liability. This covers you if a friend or visitor is injured while in your home, and pays your legal
costs if you go to court.
Renter’s insurance doesn’t cover an apartment’s building or detached structures. Before buying renter’s
insurance, take an inventory of your belongings to make sure you purchase enough coverage. Also, check
to see if you may be covered by your parents’ policy.
What homeowner’s insurance doesn’t cover
House insurance (and renter’s insurance) covers a number of perils, but there are a few things it doesn’t:
Floods. Standard homeowner’s insurance won’t cover flood damage. If you are in a flood zone, you may
have to purchase insurance, either through the National Flood Insurance Program or through a private
insurer.
Earthquakes. Also not covered under standard policies. People who live in areas where temblors are
common can purchase separate insurance, but it can be costly.
Normal wear and tear.
Mold. Some companies allow you to purchase additional coverage for mold.
Foundation cracks and settling.
Maintenance issues.
The bottom line
You’re mandated to carry insurance if you have a mortgage or home equity loan. If you’re a renter, a
landlord might not rent to you if you don’t have a policy.
Insurance helps protect you financially when disasters hit. However, different insurers will quote you
different prices for coverage, and coverage may vary from year to year.
Insurers may also drop you from their coverage if you live in an area subject to high risks, such as wildfires
or hurricanes. It pays to shop around and see what coverage you can get for various prices. Even if you’re
not mandated to have insurance, you’ll need to weigh whether you can afford to replace your home and
belongings from your own savings. It’s often not worth the risk to go without protection.

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