When you are shopping around for a homeowners insurance policy, you need to understand the major components of your policy so that you can make an apple-to-apple comparison. Below is an image showing a typical policy declaration page. The declaration page contains all the vital information at a glance; however, it is still important for you to read the entire insurance contract to make sure you know the details of your coverage.
Homeowners Insurance Policy Declaration Page Sample
Policy Declaration Page Explained
#1 – Insurer Information
The insurer’s name usually appears at the top of the declaration page. The key takes away here is to check your insurer’s rating at AM Best. You can also search for “[insurer’s name] reviews” to get an idea of how stable and how well run the company is.
#2 – Insured Information
Your name and address should appear on the policy as the insured.
#3 – Agency Information
Name, address, and contact information of the agency the help you purchase the policy should appear toward the top of the declaration page.
#4 – Insured Property
The street address of the property being insured also appears on the declaration page.
#5 – Mortgagee Information
If you have a mortgage on your property, the Mortgagee information is required by your lender to be part of the policy.
#6 – Section I Coverage, e.g., Property Coverage
It is imperative to make sure two policies you are comparing have roughly the same coverage. This is the section that lists out all the coverage and limits.
A. Dwelling – this is the maximum amount that the insurance company will pay to repair or replace the main structure of the property. This amount will be lower than your home market value because the amount does not include the value of your land.
B. Other Structures – This is the maximum amount that the insurance company will pay to repair or replace other structures not attached to the main property. For example, fencing, driveways, sidewalks, storage sheds, detached garages, etc.
C. Personal Property – anything that is not part of the house is considered personal property, e.g., clothing, furniture, electronics, appliances, etc. — basically, anything that would fall out if you turn the house upside down and shake it. This is the maximum amount that the insurance company will pay to replace your personal property. However, some high-value items have their own limits or may not be covered, e.g., fur coat, jewelry, money, firearms, etc.
D. Loss of Use – if you cannot stay at your home due to a covered peril, the insurance company will pay for your hotel stay or short-term rental, plus additional living expenses, including meals.
#7 – Section II Coverage, e.g., Liability Coverage
Again, it is essential for the policies you’re comparing to offer the same amount of coverage for Personal Liability.
E. Personal Liability – if someone sues you for damage, this is the maximum amount of protection that your policy offers.
F. Medical Payments to Others – is a small amount that insurance company pays to cover the costs associated with injuries that happen to guests at your home regardless of fault.
#8 – Adjustments
This section lists all the adjustments that either increase or decrease your insurance premium. Review this section carefully to make sure you’re getting all the discounts you’re entitled to.
#9 – Annual Premium
If you made sure everything is roughly equal between two policies, this is the amount that you are comparing when you’re shopping around for a new policy to save money on your home insurance.
Shopping for a cheaper insurance policy is not always a good thing if you have to sacrifice the coverage, stability of the insurance company, or their level of service. When you’re doing your comparison shopping, make sure you compare the annual premium based on roughly the same amount of coverage and take into consideration the quality of the insurance company.
Pinyo is a full-service Realtor with Berkshire Hathaway HomeServices PenFed Realty and an insurance agent with McEvoy Insurance & Financial Services. He specializes in representing clients in the purchase and sale of residential and investment properties throughout Virginia and Maryland areas around DC.