Okay, okay, we get it: insurance might not be your favorite thing in the world to think about. And it’s probably not your favorite thing to read about either. In other words, when you got your (very lengthy) home insurance policy, you kind of squinted at it and then stuffed it in a drawer somewhere.
We get it. That thing is intense.
But the thing is, it’s kind of important to read it all the way through. Before you groan and roll your eyes, let us give you a few compelling reasons to buckle down, take a deep breath, and slog through reading your entire home insurance policy (even though you really might not want to.)
7 reasons to read through your home insurance policy all the way through.
1. Making sure everything is correct.
Yes, we’d like to imagine that there are no mistakes anywhere in that hefty home insurance policy – no typos, no goofs, no coverages or discounts left off. But the reality is that it’s important to read through everything to check that it all looks right and looks like what you asked for.
If there are any mistakes, kindly reach out to your agent and ask them to correct it. (For example, if your address is misspelled or your mortgage company’s name isn’t right.)
2. Checking that you have enough coverage.
It’s also important to read the entire policy so that you can see if you have enough insurance (or just know how much coverage you have.) It’s best to insure your home for its replacement cost value, which is the amount it would cost to completely rebuild your home from the ground up if it’s destroyed by a loss like a fire.
It’s also important to know how much coverage you have for your personal belongings and whether they’re insured for their RCV (replacement cost value) or ACV (actual cash value). RCV will allow you to replace the belongings at today’s prices, while ACV coverage will only provide you with the depreciated value of the items (their value at the time of the loss.) You’ll also be able to see if you need extra coverage for things like valuables and jewelry.
Take note of your liability coverage, too, and make sure that you have high enough limits.
3. You need to know what is covered.
It’s essential that you know what losses are covered by your insurance. Reading through the policy means you know exactly what your home insurance will do for you and how it’s going to protect your house. Just as it’s important to know what losses are covered, it’s also a good idea to see what your home insurance policy says about:
- Your dwelling coverage
- Your personal property coverage
- Other structures coverage
- Loss of use/ALE
- Personal liability coverage
Take some time to understand these five sections of coverage. You never know – it could be on the pop quiz the insurance agent throws at your later. (Just kidding – there’s no pop quiz.)
Protect your home from fires. Get a quick homeowners insurance quote today.
4. Finding out what’s not covered.
It’s also essential that you find out what your home insurance doesn’t cover. Unfortunately, it’s not exactly a magical fairy that will just wave a sparkly wand and take care of any problems. Certain losses will be excluded. For example, flooding is not covered by home insurance. (You have to purchase a separate flood insurance policy from the National Flood Insurance Program through an agent.) By giving your policy a cover-to-cover read, you’ll avoid nasty surprises later on if something you thought was covered actually isn’t.
5. To make sure you understand any conditions of the policy.
Your home insurance policy should have a section called “conditions.” This section outlines different things that you as the policyholder have to do in order for the insurance company to provide coverage in the event of a claim. It’s important that you familiarize yourself with these conditions so you’re not looking at the insurance company with a blank stare when they ask why you haven’t fulfilled one of the conditions.
(For example, you may have to take reasonable measures to protect your property from further damage if you have a claim.)
Anyways, the conditions are what they are. Be sure to read them carefully.
6. You might discover questions that you didn’t know you had.
Taking the time to power through reading your policy gives you the opportunity to jot down your queries and thoughts. Then you can follow up with your agent and point to specific places in your policy that you have questions about. Remember, questions are your friend! Ask them. Ask all the questions.
7. It’ll just make you feel better.
Reading your policy can also give you a lot of peace of mind. You can see how your home is being protected and what your insurance will do to help you if you ever have a claim. There might even be a few losses your home insurance will take care of that you hadn’t even considered before.
And aside from peace of mind, you’ll feel better knowing that the money you’re shelling out for your home insurance is being put to good use. It’ll help your insurance feel less like a transparent, hypothetical, invisible thing and more of a concrete financial safety net.
You can probably think of a dozen things you’d rather be doing than reading a home insurance policy. We know. But it’s also an important thing to do. Devote some time to it, grab some coffee, and read away.
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