Homeowners Insurance Policy Terms
When buying a home, don't overlook the terms and conditions of your homeowner's insurance policy.
Overlooking them could result in delayed, reduced or denied claims and higher premiums.
The Consumer Federation of America (CFA) and United Policyholders (UP) says with more insurers shifting the risk and cost to policyholders, it behooves you to read your insurance policy, especially the small print.
If you don't understand something, get help from your insurance agent, broker or insurer, or someone who gets insurance policy lingo.
Pay particular attention to:
Exclusions Most policies contain exclusions for floods, earthquakes, or landslides. In areas prone to floods, earthquakes, and landslides, you'll need special coverage.
Policies also may not cover or limit coverage for mold damage, non-flood water damage, high-value items (art, collectibles, jewelry, etc.), work-at-home equipment (computers, printers, etc.), food spoilage and other specific items.
"There are new exclusions in property insurance policies today that consumers are not aware of that can blow their financial security to shreds after a serious loss," said Amy Bach, Executive Director of United Policyholders.
Deductibles Deductibles are up-front costs you pay before benefits kick in. Most policies have two different deductibles, a flat dollar amount for most losses and an higher deductible for high wind-related losses.
High-wind losses can blow you away. Clarify with your agent or insurer what your out-of-pocket costs will be in the event of a high-wind related loss.
Hidden clauses Check your policy for a provision called an anti-concurrent-causation (ACC) clause. It could result in a denial of claim if a structure is damaged at about the same time by two risks when one covered, (say, wind) but the other is not (say, flood). Even if one peril would have covered the damage, the ACC clause can limit or wipe out coverage for damage or destruction by two causes acting together.
Market demand surge costs Another, lesser known insurance-related pain in the policy can come from demand-driven rising construction costs that follow a disaster . Some policies don't come with a guaranteed home replacement cost provision. In an after-disaster market that experiences demand surge conditions, your policy could leave you with a fixed amount stated on the policy.
Your out-of-pocket expenses could cause a financial disaster.
Building codes Building code compliance issues increase rebuilding costs, but aren't always covered by your policy. Some policies exclude additional costs if a local construction ordinance or building code requires upgrades, such as earthquake upgrades in a quake zone. You'll have to purchase this coverage as an add-on to your basic policy.
Price Homeowner insurance policy prices are based on a host of factors. Compare prices when you initially purchase coverage and again if you experience a large rate increase. Also, shop around once every few years to make sure you are getting the best rate for the coverage you need.
"We recommend that every homeowner conduct a careful review of their policies and contact their agent or insurer to ensure they have the coverage they need and expect," Bach said.
Written by Broderick Perkins for www.RealtyTimes.com Copyright © 2012 Realty Times All Rights Reserved.
