Understanding Your Insurance Policy

An insurance policy is more than just a piece of paper; it is a contract that details what you are covered for, any exclusions that take away coverage, and the conditions that must be met for coverage to apply when a loss occurs. It can be difficult for those with limited insurance knowledge to comprehend some of the complex, high-level language of their policy. However, understanding the nuances of your insurance policy is crucial for ensuring that it fits your specific needs and avoiding unpleasant surprises when filing a claim.  

While every part of your insurance policy is important, the following sections are especially critical to understand:  

Declarations/EOI/Proof of Coverage

These pages offer a high-level summary of the coverages you have purchased. Essential details such as the property address, coverage limits, deductibles, and evaluation methods are included in these sections. Reviewing these pages regularly ensures that your coverage aligns with your current needs, which may change over time.  

Covered Property & Covered Causes of Loss

If the idea of reading your policy is overwhelming and you’re not sure where to start, take a look at the Covered Property and Covered Causes of Loss pages. The Covered Property section specifies what property is covered. It may include coverage for the home itself, contents, other structures, service lines, etc. Review this section of your policy to ensure that your property fits within the scope of the products outlined.  

The Covered Causes of Loss section of your policy defines the perils covered and the scenarios in which coverage may be afforded. Causes of loss are usually physical damage or direct loss to the property caused by a specific event. Our Program offers two types of coverage forms: Basic and Special. Each provides different levels of protection, and knowing which coverage form you hold is essential to prevent misunderstandings about what types of damage or loss are eligible for coverage. Read more about the differences between Basic and Special Form coverage here. 

Sublimits

Sublimits are specific limitations within your policy that set the maximum payout for particular types of property or risks. They are designed to help limit exposure and keep insurance affordable by capping the payout for certain claims. It is common for things like theft, vandalism, and tree removal to carry sublimits. While your policy may cover a particular type of loss, the payout might be capped at a certain amount. Knowing these limits can provide insight into where you might have exposure or gaps in coverage, helping you to have a plan ahead of time, should one of those losses occur. 

Endorsements & Exclusions 

Endorsements are modifications to your insurance policy that tailor its coverage. These adjustments may add, remove, or alter the existing coverage. For instance, some policies in our Program include endorsements that remove coverage for cosmetic hail damage to roofs and siding, which means any damage affecting only the appearance (not the functionality) would not be covered. Other endorsements may adjust the terms for things like tree or debris removal after a storm, specifically how and when these costs are covered. Understanding the endorsements in your policy is vital because they directly impact the scope of your coverage, potentially affecting your claims and out-of-pocket expenses. 

Exclusions outline what is not covered by your insurance policy, and they play a significant role in defining the boundaries of your coverage. Insurers often exclude coverage for exposures that are either too large or too costly to insure, such as nuclear attacks or earthquakes, which require separate, specialized policies. Additionally, exclusions may encompass issues that are considered the property owner’s responsibility. Things like general maintenance problems, wear and tear, or mold and almost always excluded because they are conditions that develop over time and can usually be prevented with regular upkeep. Remember, insurance is designed to cover sudden and accidental damage, not gradual deterioration or preventable issues. Knowing the exclusions in your policy helps you understand what risks you retain as the homeowner and ensures that you do not mistakenly expect coverage for incidents which your policy specifically omits.  

Policy Conditions  

The responsibilities and obligations that you, as the insured, must fulfill to maintain the validity of your insurance contract are outlined in the Policy Conditions section. Failure to adhere to these guidelines can result in claim denial or even the cancellation of your policy. Some common responsibilities include: 

• Truthfulness on applications and claims: Misrepresentation or omission of important details can lead to the denial of claims or the voiding of your policy. For example, if you falsely state the occupancy status of your property as “occupied” when it is vacant, and a theft occurs, the insurer may deny your claim based on this misrepresentation.  
• Property inspections: Typically, following a loss you are required to make the property available for inspection by the insurance company or third-party adjuster. This allows the insurer to assess the damage and verify the cause and extent of the loss.  
• Maintenance and upkeep: As previously mentioned, insurance is designed to cover sudden and accidental damage, not issues arising from neglect or poor maintenance. As a policyholder, you are responsible for regular upkeep of the property.  
• Notification of changes: If there are significant changes to your property or its use, you must inform your insurer. Renovations, changes in occupancy, or additions of high-value items can affect your coverage needs and the terms of your policy.  

Maintaining general knowledge of the items listed on your declarations page, covered property, covered causes of loss, sublimits, endorsements, exclusions, and policy conditions empowers you to make informed decisions about your coverage. The sections highlighted above, though not exhaustive, are a few of the critical areas that require your understanding. Review your policy regularly, twice per year is a good start. Don’t be afraid to ask questions if something doesn’t make sense, our team is here to help you!