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Understanding Your Homeowners Insurance Declaration Page
Home insurance policies offer protection for the insured home, the possessions within the home and the homeowner’s liability.
If the home is damaged or the homeowner faces liability, the insurance will cover the cost up to the limits defined in the policy. Understanding what your insurance covers is important in case you ever need to file a claim.
Learn how to read your declaration page to understand your policy.
What is a homeowners insurance declaration page?
At the beginning of the policy term, the insurer will issue policyholders a declaration page that outlines the details of the policy. The declaration page is the policy in a nutshell. All of the most important parts will be listed on the page.
Many home insurance policies have a year term, so an updated declaration page will be issued if the policy is renewed. Whenever a policy is renewed for another term, check the declarations page to see what has changed.
Information on the declaration page
Every insurance company will have their own version of a declaration page. The exact information and its location on the page will differ from company to company, but most declaration pages include core policy information like a summary, premium, main coverages, deductibles, optional coverages and discounts.
The common information included in most declaration pages is broken out below with corresponding page location and definition.
|Includes insurer name, agent name, property location, policy number, policy type and personal information|
|Upfront cost of the policy|
|Lists what coverages are included in the policy and the limits of coverage|
|Amount the policyholder must pay out-of-pocket before the policy pays the claim for each coverage|
|Additional coverages purchased and any other individualized changes to the policy|
|Personal discounts applied to the cost of the premium|
The first section on a declaration page is almost always the summary. This is high-level information about the home insurance policy. Policyholders should be able to skim this section and get a good idea of the policy’s broad strokes. Common items include:
- Company providing the insurance
- Specific agent handling the policy
- Location of the property
- Policy number
- Policy type
- Personal information of policyholder
The premium is the amount that the homeowner will pay upfront to receive the policy. The cost of the premium is determined by a range of individual factors like the age and location of the home and personal information like the homeowner’s credit score and claims history.
If the policy term is for a year, the cost of the premium will be annualized. However, many homeowners pay their home insurance premium monthly. So, the annualized premium listed in this section will probably be split out into monthly installments.
Home insurance coverages and deductibles
Home insurance coverages show what is covered under the policy, meaning the physical things an insurance company will pay to fix or replace when damaged by a covered peril, such as hail or lightning.
The deductible amount is how much the homeowner will have to pay after filing a claim. The deductible will have to be paid before the policy steps in and picks up the rest of the tab. Each coverage will have a corresponding deductible amount.
The coverages listed in the declaration page are specific to the home insurance policy, which can vary significantly. These are the most common coverages listed in most standard home insurance policies:
- Dwelling: This coverage pays for the house and attached structures like a porch or garage.
- Other structures: This pays for unattached structures like a fence or shed.
- Personal belongings: This pays for valuables like jewelry or furniture.
- Personal liability: This pays for lawsuits against the policyholder when the incident occurred on the insured property.
- Medical payments to others: This pays for medical bills for people who are injured on the insured property.
Optional coverages and endorsements
An endorsement is any change that is made to a standard insurance policy. The most common endorsements in home insurance policies are optional coverages.
After choosing a home insurance policy and becoming familiar with the coverages included, you can add optional coverages to the policy for an additional fee. This section will generally be placed below the main coverages on the declaration page.
Just like main coverages, optional coverages and endorsements look different depending on the company and the specific policy. Here are a few of the most common add-on coverages:
- Extended replacement cost: This increases the limit of coverage on the dwelling.
- Sewer backup coverage: Many insurers view sewer backup as a separate issue from water damage, so an additional coverage is required.
- Earthquake coverage: Earthquakes are often excluded from standard home policies due to the risk, so you’ll need to buy add-on coverage if you want earthquake protection.
Home insurance discounts
Home insurance can get expensive fast, especially when adding additional coverages. Thankfully, insurance companies offer various discounts on their policies to homeowners with good behavior. The discounts section is generally listed at the bottom of the declaration page. Here are a few common discounts:
- Multi-policy discount: People who use the same company for home and auto insurance often get a discount on both.
- Claims-free discount: Homeowners who don’t file a claim with the insurer might receive a lower premium the following year.
- Alarm system discount: Homes outfitted with alarm systems for burglary or fire are seen as lower risk and could be eligible for a discounted policy.
How to renew your policy
There is a one-year term on most home insurance policies. Insurers will usually send out renewal statements before the year is out. Many insurers will set up the policy so it auto-renews. Before renewing the policy, go over the declaration page closely to ensure the coverages are adequate.
When will you need your declaration page?
There are at least three times when it’s important to have the homeowners declaration page on hand: when the policy begins, when the policy renews and when filing a claim.
When the policy begins, read over the declaration page to ensure you understand all the details and no mistakes were made. When the policy renews, reading over the declaration page again is important to make sure the policy still fits the needs of the homeowner.
Finally, when filing a claim, read over the declaration page first—it will serve as a guide when going through the process of filing a claim with the insurance company.
The declaration page is an important tool to help you understand your policy. Make sure you keep it in a secure place and refer to it when you have questions about your homeowners insurance.