How to Read a Homeowners Insurance Policy

You need to do a little more than pay the premium and keep the documents in a safe place if you want to ensure you’re fully protected when you take out an insurance policy. And while no one wants to sit down and read an insurance policy, doing so could save you thousands in the long term, as well as mean the difference between being able to successfully claim on your policy and having a claim rejected.

Most insurance polices are now produced with an “at a glance” guide of what’s included in the cover. This is essentially a reference guide for the policy holder so that he can check that what he wants covered actually is. This guide is a good place to start when reading your homeowners insurance policy. From this list you’ll be able to check that the items you’ve requested coverage for have been included in the policy. If you don’t see an item included in the coverage schedule that you’ve requested coverage for, contact the insurance company.

While this guide acts as a useful checklist, you also need to read the policy document to know what conditions apply and in what circumstances a claim will be paid. For example, while you may have protection against theft of your digital camera or laptop, you may not be able to claim if the items are lost or damaged rather than stolen.

As well as reading the policy conditions, it’s also important to check what your obligations are under the policy. Usually there are three main conditions on which homeowners insurance is provided, and which you are obliged to comply with:

– Reporting a claim as soon as possible

– Cooperating fully with the insurance company or agent

– Failing to protect the property from any further loss

No insurance policy will pay out for a policy holder’s negligence. This means that if you don’t take appropriate steps to rectify a problem in your home and that problem leads to your home sustaining further damage, then an insurance company won’t reimburse you the cost of repairing that damage, only the cost of putting right the original problem. Therefore, always repair any damage to your home as quickly as you can and advise the insurance company immediately of any damage that you believe will result in a claim. In addition, always cooperate with the insurance company as not doing so may affect how, and when, or even if, your claim is processed.

It’s sometimes difficult to fully understand insurance policies as they usually contain terms that aren’t words or phrases commonly used. For example, the term “floater” refers to a type of insurance that covers specific items when they’re not in your home. Your insurance documents will include a “glossary of terms” which you should refer to when reading your policy to help you better understand it.

Reading through your insurance policy will give you valuable peace of mind, and once done, you can then put away your documents safe in the knowledge that you’re fully protected.