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Homeowner’s Insurance Policy

When buying a home, pay close attention to 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) say it behooves you to read your insurance policy carefully – especially the fine print.  More insurers are shifting the risks and costs to the policyholders.

Pay close attention to:

Exclusions.  Most policies contain exclusions for floods, earthquakes or landslides. If you live in an area prone to any of these, you’ll need special coverage.   Policies also may not cover, or will have limited coverage for mold damage, non-flood water damage, high-value items (art, collectibles, jewelry etc.), work-at-home equipment, 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.  These are up-front costs you pay before benefits kick in.  Most policies have two different deductibles – a flat dollar amount for most losses and a higher deductible for wind-related losses.  High wind losses can be very costly.  Clarify with you agent or insurer what your out-of-pocket costs will be in the event of a high wind related loss.

Building Codes.  Building code compliance issues will increase rebuilding costs, but they aren’t always covered by your policy.  Some policies exclude any additional costs caused by local construction ordinance or building code upgrades.  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 other factors.  Compare price 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 your need.