By Zak Larsen
As with most of my blogs, I’m writing today because of a call I had this morning. I had a gentleman call in because he had just received his policy renewal and realized he didn’t actually understand what any of the numbers meant on his declarations page. We briefly walked through the policy and it got me thinking that a lot of people probably just receive their renewal packet and send in their payment without even questioning it. For those people, I’m so glad that you trust us enough that you don’t feel the need to question us! However, in my own life I go by the motto of “trust but verify.” So let’s walk through the ABC’s (literally) of your policy a little bit.
Unlike auto policies, home insurance policies don’t just list out the name of each coverage but rather have a single letter associated with each of the 6 main coverages.
Coverage A – This is the main part of your policy and covers the dwelling itself; the next 3 coverages are also based on the limit of Coverage A. This limit is different for everyone and is based on an estimated rebuilding cost of the home. When your agent first quotes a policy, they will probably ask a lot of questions like “when was the last time your updated XYZ” or “what percentage of your basement is finished.” The reason for questions like these are to get as accurate an estimate as possible– no agent wants to underinsure a home so they want to make sure they’ve got it right.
Coverage B – This coverage is 10% of Coverage A and covers any related private structures on the policy. So this coverage would be for any detached garages, garden sheds, storage sheds, etc. If you have a larger or more expensive shed or workshop, be sure to talk to your agent about that as they may need to include an endorsement on your policy to raise this limit in order to adequately cover that building.
Coverage C – The limit for this coverage is 75% of Coverage A and covers your personal property. This is for damage to or theft of your personal belongings. This would cover things like jewelry, furniture, and guns to name a few. For items of more value that you want to make sure there is enough coverage for, be sure to talk to your agent about “scheduling” or specifically listing out the value of certain items. Scheduling is very common for expensive jewelry or collectible items.
Coverage D – The final coverage that is based off of Coverage A is for additional living expenses. This amount is 30% of Coverage A and helps to cover expenses due to the “loss of use” of your home. Similar to rental car coverage on an auto policy, it helps to provide you with rent/hotel fare in the case that your home is damaged to the point where you cannot live there during any repairs from the claim.
The last two main coverages are not based on Coverage A, but can be chosen at specific limits provided by each company. They provide your liability coverage in different situations.
Coverage L – Personal liability, this covers your liability for damage to other people’s property that you are responsible for. This coverage can also help to handle legal and defense costs in the case of a lawsuit.
Coverage M – Medical Payments to Others, this helps to cover bodily injury that occurs to others (that do not live in the home) while on your property.
Whoa! That’s a lot of stuff that’s covered by a home policy. These are just the main 6 coverages that are included in every policy. There are also a multitude of endorsements that help to cover more one off situations and other types of damage.
Still have questions about your policy? Good! Give us a call at 913-338-1100 or drop by our office in Overland Park. We’ll help you to verify your understanding of the policy and remind you just why you trust us! Not a MAX Insurance Agency client? Still give us a call and we would be happy to work up a quote and walk you through each coverage in more detail.
Zak started at MAX in October of 2017 and has 3 years of insurance experience, specifically in auto insurance claims. A big sports fan, he spends time cheering on the Wild, Twins, and Vikings. Most of all he enjoys spending time with his family, working with his hands, and doing just about anything outdoors (especially fishing and camping). Zak also volunteers with a local high school youth group and helps to run a networking group for young professionals.