Before the Storm, Prestorm Checklist, Part Two, Declarations Page part one
The Declarations Page Part One
In our last post, we took you through the basics of documenting your belongings and the condition of your home in the even that catastrophe strikes. This is a great tool for insurance adjusters to accurately assess the value of your property. In this post we going to lift the curtain on your policy and show you how to find out just how much you expect from your agent. We know you thought you were done with reading when you left school, but the declarations page of your insurance policy should definitely be on your reading list, here is what to look for.
If you are like most of us, you only look at your policy at the time of purchase, or when changes are made. In fact, you probably only saw it long enough to put a pen to it and sign it. When you pull the policy out, you will find a stack of papers filled with indecipherable legal mumbo jumbo, all designed to outline your insurers responsibilities to you, the policy holder. You only need one page to understand most of the rest. Find your “Declarations Page”
You probably know that there is a deductible on your policy. This is the amount you will be expected to pay out of pocket to restore your home after damage has occurred. What you may not know, is that there are separate deductibles for hail and wind! That’s right, it is calculated differently. Check the amount of your deductible and make note of whether the hail and wind deductible is different. It may not be stated in a dollar amount, but rather a percentage of your home’s value.
This, in many ways is the real value of your home. This part of your policy describes what your insurance company would pay you in the case of catastrophic loss, in other words, in Oklahoma, if a tornado clears the foundation. The Coverage Limit is the big key here, this is the most money your insurance company is willing to pay if your home is destroyed. This number should not be confused with an appraisal, or the sale value of your home, these are two completely separate numbers. Your coverage limit should be 15-to-20 percent higher than your homes value, to cover the cost of reconstruction, which is always higher than new construction. Many policies will cover only 80 percent of the cost in the case of a total loss.
To be Continued
There are several other things that you should be looking at, including whether your coverage limit is Actual Cash Value, or Replacement Cash Value. Stay tuned for more!