Trying to make sense of all the terms and jargon on your home insurance policy can be confusing, and when it comes to insurance, small differences in the contract language can make a big difference to your bottom line after a claim. Our agents and licensed staff are always happy to assist with your questions but we've defined some important terms to look for below.
A deductible is simply the amount you self-insure. If you have a $10,000 loss that's fully reimbursable and a $1,000 deductible, you'd receive a payment of $9,000 (10,000 – 1,000). Deductibles are a standard element of most insurance policies but sometimes we'll see policies that have a more complicated deductible.
It's also possible that you have a separate deductible for wind and/or hail losses. You could have a deductible of $1,000 on your policy with a wind/hail deductible of $5,000. This means that the $1,000 deductible would apply to a home fire or theft loss but a $5,000 deductible would apply to a loss resulting from a tornado or hail storm. Since wind and hail damages are some of the most common causes of loss to homes in Minnesota, it's important to understand what kind of coverage you have in place so you don't get surprised after a claim.
Take your roof as an example. Assume for illustrative purposes that there is no deductible. If your roof is destroyed by hail and it costs $12,000 to replace, replacement cost valuation should pay you $12,000. Actual cash value will likely start at $12,000 and go down from there. Say your roof is depreciated by 30%. You'll actually receive a payment of $8,400 (12,000 x 70%).
Certain classes of high risk property have sub-limits of coverage on home insurance policies by default. If you own jewelry, guns, furs, art, or several other high value classes of property, you should check your policy to see if they're scheduled. If not, you may be under-protected. The most common use of scheduled personal property is for jewelry, like engagement and wedding rings. If you have a ring worth thousands and you don't see it listed on your policy, you should contact your agent.
Insurance contract language can be hard to decipher. Atlas Insurance agents and staff are here to help. If you have any questions or would like a free review of your policies, simply contact us.