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Step 1
Find your "dec page" - slang for "declaration page". Insurance companies send out a dec page when a policy is first issued and a new one at each renewal. A dec page will list the info that is unique to your policy such as the names of the insured and property address, limits of coverage in dollar amounts, deductibles and the premium amount. If you can't locate it, you can request one from your company/agent.
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Step 2
Make sure the info on the dec page is correct.
Name and address correct?
Is your lien holder correct? Sometimes a loan is sold or transferred to a new lender and no one notifies the insurance company.
Now let's talk about the numbers.
1. The dollar amount shown under "dwelling" or sometimes called "coverage A" is the limit of the policy to rebuild the main structure on the property. This number should be the "reconstruction cost" of the home and has nothing to do with the "market value" of the property. Think about what it would cost to reconstruct your home if it were a total loss.
2. Next is usually "separate structures" and that amount is most commonly an additional 10% of the dwelling amount. This is to cover most detached structures such as outbuildings, fences, detached garages, etc.
3. Next is usually "personal property" or sometimes called "coverage B" and that amount is most commonly an additional 60% to cover your personal belongings, furniture, etc. Check with the company/agent to see what limitations are on the policy as you might need a rider or endorsement for some items like jewelry, furs, etc.
4. Next is usually "Loss of Use". This dollar amount of money is to cover additional expenses if you are displaced from the residence as a result of the claim.
5. Next is usually Personal Liability and dollar amounts commonly range up to $500,000. This amount is to protect you in the event something happens where you could be held personally liable for the damages. Examples would include someone/something being injured/damaged as a result of your negligence.
6. Next is usually "Medical Payments" and this amount is normally to pay for injury to a non-resident while on your property. -
Step 3
Deductibles !
Know what your deductibles are. In today's market, the most common is a 1% deductible. This will mean 1% of the dwelling or coverage A amount. If your home is insured for $150,000 then a 1% deductible would be $1500. Some policies list deductibles in a $ amount and not as percentages. In either case that is the amount of money out of your pocket before you get to the insurance companies pocket in the event of a covered claim. -
Step 4
Most importantly know what the policy covers.
Most policies are either "named perils" or "broad form".
Contact your company/agent to determine what policy you have.
Here are some of the common named perils:
1. Fire and Lightning
2. Sudden and accidental damage from smoke
3. Windstorm, tropical cyclone and hail
4. Theft
5. Sudden and accidental discharge, eruption, overflow or release of water.
These perils will vary from one company to another. Make sure you are comfortable with the coverage your policy provides. -
Step 5
Understand whether your policy is "ACV - Actual Cash Value" or "Replacement Cost"
If your policy is ACV coverage then your claim will be handled for the value of the covered item at the time of the loss or its "depreciated value".
If your policy is Replacement Cost then your claim will be handled at the value for what it would cost to repair/replace with a new item of like kind and quality.
