What's in the form? A discussion on Homeowners Insurance
In the world of “only pay for what you need”, shopping for insurance has taken on a new feel. The decision making about coverages and limits are now placed in the hands of the buyer. While this does lead to the buyer having the power to choose, it can be a difficult set of choices if you do not understand some of the differences in products offered by the insurance industry.
Insurance is a not a “one size fits all” product. Different customers have different needs and different exposures have different treatments. We will take a look at homeowners’ insurance to highlights some of the choices available to you. This commentary is based on ISO forms. Individual companies may offer their own versions of homeowners policies.
The titles of the forms are not descriptive. Many people expect the broad form to be better than the special form. The language is not intuitive.
To appreciate the differences in these forms you need to understand the difference between a named perils and open perils insurance form. Without this context, you cannot make an informed choice as to what you need.
Named Perils – policies using this type of coverage trigger include a list or descriptions of the perils that are intended to be covered by the policy. The insured party has the burden of proof to show that the loss was caused by one of the stated perils and is covered. Different policies may have different perils named. You need to evaluate the specific form to be sure you have the coverage you need.
Open Perils - these policies take the opposite approach of named perils. The insurer describes or lists the perils that are not covered. The burden of proof at time of loss lies with the insurer to prove that coverage does not apply. It is still important to review the excluded perils on these forms to see if you have the coverage you need. The policies were once referred to as “all risk” coverage. That language is no longer used as it was found to be misleading.
The differences in the policy forms become clearer when you understand the structure of the coverage. This also sets the stage for how you would approach a claim under these policies. If this is new information to you, do not feel bad. You will not find this level of detail on the web sites that want you to buy insurance directly.
The insurance policy is a contract between you and the insurance company. In exchange for your paying the premium, the insurance company is obligated to provide the coverage in the form. You need to know the language of the form to evaluate what perils are either covered or excluded. The challenge is that you do not get the form until you purchase the policy. Most carrier web sites have FAQ sections, but they do not offer a copy of the form. As a result, you may find making the above suggested coverage comparisons a challenge.
This discussion did not touch on the wide range of variables on deductibles, valuation terms and the endorsements that are available to tailor coverage to your situation. We know that you have a limit on your desire to read about insurance.
The Driehaus Difference
You have a busy life and may not want to take your time to uncover the definitions, policy terms and unique language of insurance contracts. You may not want to compare products from company to company. We have done this already.
We want our clients to know the differences between forms and coverages. We can explain these to you and tell you why we suggest a carrier and the product from that carrier for you. We pride ourselves on our depth of insurance knowledge and experience. We want to use that knowledge to your advantage. Contact us by phone at 513-977-6860 or the internet at www.driehausins.com.