Have you ever asked yourself, “What exactly does my insurance policy cover?” Most days, probably not! But when you find yourself in need of insurance, in the midst of a claim, or possibly having to file a claim, chances are you’ll want to know what coverages you have. So you pull out your policy and see pages upon pages of definitions, coverages, etc. If you’re like most people who don’t deal with insurance on a regular basis, you’re probably saying to yourself “YIKES!” But don’t go pulling your hair out just yet, we’re here to help you sort through it all!

Most insurance policies have the same basic layout: Insuring Agreement (what we’ve agreed to cover), Definitions (defining certain words and phrases throughout the policy), Coverages (home, outbuildings, personal property, etc.), Exclusions (what’s not covered) and Conditions (what’s required from you and the insurance company in the event of a loss). What’s important to remember is that each section is divided into several different categories. For example, let’s look at the very common Homeowners 3 policy. Section I of the policy deals with property coverage and Section II deals with liability coverage.

Next, focus on the part of the policy for which you’re trying to find coverage. If you’re a homeowner trying to determine what property coverages you have, Section I is what you want…so save time and don’t even worry about Section II, which takes away a lot of the legwork already!

If you have a detached storage building on your property and trying to determine if there is coverage for it, focus on “Coverage B – Other Structures” and that will lay out what coverage is provided. From there, you’ll see whether there are any “Special Limits of Liability,” the “Perils Insured Against,” “Exclusions,” and “Conditions.” It’s important to remember that while there is a lot of information contained within a policy, it’s laid out in a logical order that helps when trying to determine what is covered, excluded, and needed from both you and your insurance company.

So remember when it comes time to sort through your policy, don’t get overwhelmed! Take it step by step, and you’ll find what you’re looking for!

Copyright © 2018 Central Mutual Insurance Company. All rights reserved.

7 responses to “Understanding Your Insurance Policy 101”

  1. My husband and I are going to be applying for homeowners insurance for our new home early in January, and we really appreciate you helping us understand it all better. It’s good to know that detached structures will need their own coverage, especially as our house is going to be coming with a shed. We’ll be sure to take your advice and take each element one at a time to avoid being overwhelmed when we look over our options, for sure.

    1. Hi Rhianna! We are so glad you found this article helpful. If you ever have any questions or need further assistance, please don’t hesitate to reach out!

  2. I like how you mentioned how important it is to know what exactly the insurance for a house covers since you might be in the middle of a situation and you have to know whether or not your house is qualified for this particular kind of insurance or not. At the same time, make sure to read and review the insurance policies your house might have since it might be outdated and needs to be renewed or you might be overpaying for something you don’t really need. If I had the chance to look over my house’s insurance I would want to make sure that whatever kind of insurance I have is the kind that my living space really needs.

  3. larrynweaver2017 Avatar

    Thanks for explaining how Section I of a home insurance policy deals with property coverage. I actually didn’t realize that there were different sections of a home insurance policy. My wife and I are planning on moving out from our apartment and purchasing our first home, so we will be sure to pay attention to the different home insurance policy we eventually get.

  4. Insurance is a means of protection from financial loss.
    It is contract by a policy in which an individual or entity receives financial protection
    against losses from an insurance company.
    It is a form of risk management,
    primarily used to hedge against the risk of a contingent or sudden losses both big and
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    The company pools client’s risks to make payment more affordable for the insured.

  5. Thanks for explaining how to understand your insurance policy. My cousin is thinking about getting insurance. It would be really nice if a professional could help her make an insurance plan.

  6. Hi! thanks for the article, I put on note what you said, I’ll share this with my husband since we are talking about this since last day and I’ve been looking for this subject, I’m glad I read your post.

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