subject: Learning Home Insurance Terms And Conditions [print this page] Insurance policies have a number of options, riders, terms, and conditions available for policy holders. With this flexibility in coverage terms also comes a certain amount of confusion for customers. Knowing and understanding the specifics of common terms and conditions is critical in ensuring that the home policy provides the correct amount of protection for each unique homeowner.
Let's take a look at a few common terms and how they are applied.
Policy Options
One of the most important conditions for home insurance claims is "new for old" as compared to "indemnity cover." These terms are used when a policyholder files a claim for damaged or lost property and items. "New for old" policies replace claimed items with a comparable new product; for example, a claim on a TV would allow the homeowner to purchase a new retail model. "Indemnity cover" is a term that will either only provide a reimbursement for the current value of an item. In the TV example, a ten year old model would not be replaced with a new flat screen.
Accidental coverage is an option that provides protection against mishaps and accidents. For example, a policy with accidental coverage would cover an item that was knocked off of a shelf by a child playing in the house. This option, however, only covers specific items, such as the TV or stereo, and isn't umbrella coverage; check the fine print on this option.
Personal belongings coverage is an interesting home insurance rider. Purchasing this option would extend protection to items taken out of the home. One could cover their laptop when it is both in the home or traveling with its owner.
Policy Terms
There are also a number of very specific phrases in home insurance that have defined meanings. For example, the term "policyholder" is used to denote the owner of the policy.
"Excess" is the term used to define how much a policyholder is liable for when they make a claim. This is similar to a deductible in auto coverage; the excess is paid first and then the insurer covers the rest. The excess is negotiable, a policyholder can use a higher excess to reduce monthly premiums and vice versa. Be sure to always set the excess to an amount that you can reasonably expect to afford when making a claim.
"Material fact" is an important term when it comes to creating a policy. Material fact states that a policyholder has to be completely truthful with all the information they supply to their insurer. These facts are used to assess risks and set the terms of the overall home insurance policy. Any false information, whether knowingly or unknowingly included, can invalidate a policy.
by: Christine Harrell
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