Assuming you have the right coverage is simply not enough. It’s important to know the details of your insurance policy so if the time comes, you’ll have exactly what you need to remedy damages. Having the right insurance coverage when you need it can make all the difference. Take a look at our top 5 things you should know about your insurance policy.

Know Your Type of Policy

  • There are 9 different forms or insurance policies. The most common type of policy is an HO-3 form which offers broad coverage and is generally affordable. For more coverage there is a more comprehensive form, HO-5, that will protect you in the event of other perils not covered on your other policies.
  • If you live in a condo, mobile home, older home, or as a tenant (typically rented properties) you will want to purchase policies specific to those living situations.
  • Check clearly whether you have a recoverable or non-recoverable plan. In a recoverable plan policy, owners will collect on depreciation costs on items damaged or total replacement costs. If a policy is non-recoverable then reimbursement will be for the actual cash value (ACV) of whatever was damaged. ACV is calculated by subtracting an items depreciation from its replacement cost.
  • With a non-recoverable plan, you will pay more out-of-pocket than just your deductible costs. Your costs will include your policy’s deductible PLUS any depreciation amount for full replacement.
  • With a recoverable plan, you will pay your deductible then, receive the ACV on your claim PLUS the depreciation amount.
  • Be aware that some recoverable plans may become non-recoverable if certain conditions like repairs or replacements are not made.

Know What Losses Are Covered

  • It is vital that you understand what perils a policy will cover and that you have the coverage you need in case of loss. Read your policy and be aware of terms used. Some are very broad, and others may be more restrictive. Pay close attention to how the insured and insured location is defined in the policy.
  • Be aware of perils your policy does not cover and consider purchasing additional coverage. Some perils can be covered by adding an endorsement, for others you may have to purchase an additional policy to cover a specific peril or item of property.

Know Your Deductible

  • A deductible is the amount of money you will pay out-of-pocket toward damages or a loss before your insurance company will pay for a claim.
  • Deductibles are typically dollar or percentage amounts. The amount you choose is locked in with the terms of your coverage when purchased. For dollar amount deductibles the amount you pay comes out of the claim payment. For example, if you pay a $500 deductible and your claim is for $5,000, you would receive a claim check for $4,500. Percentage deductibles are based off a percentage of your homes insured value. For example, if your home is insured for $200,000 and you have a 1% deductible, $2,000 would be deducted from your claim payment. If your claim was for $10,000 your coverage amount would be $8,000.
  • Deductibles apply each time you file a claim. (Exceptions in Florida)

Additional Coverage May Be Needed

  • Reasons you may want extra coverage include floods, earthquakes, wind & hail damage (in some areas), mold, sewage systems, and other plumbing or drain systems.
  • Most insurance policies do not cover earthquake or flood damage. If you live in a high-risk area you may need extra coverage. The government has programs to aide in these situations. Visit to find out your flood risk and to find plans.
  • Protection of your possessions is another often overlooked area. Your standard policy may be limited so extra coverage for anything of personal value or worth may be worth adding.
  • Talking with your insurance agent and doing an overall assessment of your possible risks and needs is the best way to get you adequately covered.

Review Your Policy Often

  • Life is constantly changing, and it is important that you keep your insurance coverage up to date with your current needs. The coverage you needed in your first home or apartment may be different that the coverage you need twenty years down the road if you are in a larger home, with several cars, or a valuable collection.
  • It is recommended that you have a personal insurance audit every few years to be sure your policies are in line with your assets, living situation, and lifestyle.

 Getting to know your insurance policy is an important part of being a homeowner. If an emergency arises, you want to know that you are covered for damages and will be able to get back on your feet without considerable loss.


Related Blog Posts:

Let’s Talk Deductibles.  What Are They?  What Kind of Deductible Do I Have?  Should I Make Changes?

What is a Deductible? How Does it Work?

How Do I Know if my Insurance Really Has Me Covered?

Determine Which Insurance Policy is Right for You

Recoverable or Non-recoverable Policy. Know the Difference.


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