Have you ever picked up your home insurance policy and wondered exactly what coverage you have? The average policy can total 20-30 or more pages and is often written in a way that may be difficult for the average consumer to understand immediately. And that is in any city – Phoenix, Portland, Raleigh, Sacramento, etc. As a result of superstorm Sandy, there is now a bill in New Jersey that would require insurers to provide homeowners with a single-page policy summary, capturing all the important aspects of coverage. While this may be beneficial, it is no substitute for you taking the time to actually read your entire policy. Once you have reviewed your policy, you can make a quick summary of your own to refer to from time to time.
According to Insurance Journal, the bill would require insurers to provide homeowners with a summary of the main coverages and exclusions contained within the policy. Even though this can seem to be a step in the right direction, the fact remains that an insurance policy is a legal contract between two parties: the insurer and the insured. Like most legal documents, the policy is somewhat lengthy and can be difficult to understand at times. However, insurance policies have been created in more recent years to be more user-friendly for the average consumer. They are not generally filled with too much legalese and have a logical format.
Until the bill is passed and consumers have a standardized summary to review, you can still scan your policy for the key points. To make your own quick summary, there are specific items to include. The first and most important part of your policy is the declarations page, also known as the “dec page.” This is the most customized portion of your policy as it has values specific to your dwelling and personal property coverage limits. It will also show other limits of coverage, including the personal liability portion of the policy.
With the policy limits in hand, your next areas of key concern should be the covered and excluded perils. As most home insurance policies are now written on an “all-risk” basis, it means that the policy will cover damage resulting from all perils except those which are specifically excluded. Read through the covered loss portion of the policy and verify that you have all-risk coverage. With that confirmed, you should make a list of the excluded perils. Having this information at hand will help you know quickly if an issue is covered or if it may be a grey area, in which case you would likely need to pull out the policy to review more carefully.
With this basic information summarized, you have essentially created your own single-page policy. However, no summary document will ever provide you with the detailed information that is necessary to properly handle a claim. Just as the claims adjusters will not use a single-page policy to resolve a claim question or dispute, nor should you solely rely on your own or anyone else’s summary. There is simply no substitute for the verbiage in the actual policy. Consider your summary as a starting point to answer some basic questions as to limits and broad categories of coverage and exclusions but always expect to have the full policy available for more involved questions.