Is there a trick to understanding an insurance policy? p4
After our last three posts, you may be wondering what could possibly be left, what other information can an insurance policy contain? We have the insuring agreement, the exemptions and exceptions, the dec page … we know that skimming is a bad idea. What else?
There are a few other reminders that will help you figure out what you have just paid for. Most of these are good things to keep in mind as you read any contract.
Conjunctions matter. When you are reading a list, pay particular attention to whether they are “and” items or “or” items. Conjunctions can sneak up on you even in run-of-the-mill sentences.
For example: “Insured must mail [and] [or] deliver documents to the insurer within six (6) days.” There’s a world of difference between “mail and deliver” and “mail or deliver” — in an insurance policy, a coverage decision can turn on that one word.
Read the definitions section. We mentioned the definitions section briefly when we were talking about how to figure out who the insured is. You don’t see coverage for mold damage in your homeowners policy? Check the definitions section; it’s listed under “fungi.”
Compare limits to loss potential. If your home is worth $1 million, but your insurance policy has a coverage limit of $750,000, you are in for a world of hurt if the house is destroyed. Having some insurance is better than having no insurance at all, but it makes better sense to insure the full value, or the full replacement value, of your property.
We have just one more item to review, and it’s important. We’ll cover that in our next post and then move on to more dramatic — and more Florida-specific — topics.
Sources:
Insurance Journal, “How to Read Any Insurance Policy: 12 Rules,” Christopher J. Boggs, Jan. 5, 2015
IRMI, Risk & Insurance KnowledgeBase, at www.irmi.com
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