Every policy wording has terms and conditions. These aren’t designed to trip clients up, but they do set parameters that must be met before the insurance coverage has to respond to a claim.
When was the last time you read your home insurance policy wording? Not the schedules, which is just the listing of your Sums Insured and excesses, but the actual full policy? Be honest, I’m not keeping score.
But if you can’t remember, or are pretty sure that the answer is never, you’re not alone. So it might be time to revisit your cover. Some of us love surprises while others hate them, but in my experience no one ever really likes a surprise when they’re trying to claim on their insurance. As hurricane season ramps up, refreshing yourself with the terms and conditions of your coverage before the storm is a really good idea.
Every policy wording has terms and conditions. These aren’t designed to trip clients up, but they do set parameters that must be met before the insurance coverage has to respond to a claim. By establishing some controls on what is covered, insurers are able to manage their exposures which serves to keep insurance premiums as reasonable as possible. In order to ensure that at the time of loss that you are in good standing with the terms of your insurance policy, a periodic re-read (or first read) is in order.
On the surface, Hurricane coverage is pretty straightforward. Unless you’ve opted to not take hurricane coverage (which is possible, but not recommended), your policy will have storms as a covered cause of loss.
The first thing to be aware of within that hurricane coverage is that there is an excess, or deductible, for storm damage. The market standard excess for buildings coverage in Bermuda is $2,500, and $500 for contents. This is an amount that you will have to contribute towards the claim settlement. If your claim ends up at less than the deductible, your insurance will not respond. It is probably a good idea to ensure that within your contingency fund you have enough earmarked for a hurricane deductible.
Another exclusion to be aware of is that there is no cover for gates, fences or awnings in a storm, and cover for railings and other external fixtures would only be covered if they are attached to the physical structure of your home. There can be exceptions made, of course, but those exceptions would need to be made with underwriters, in writing, in advance of the storm. If you are in any way unclear about whether outdoor structures are covered for hurricane, now is the time to reach out to your insurer and check.
You should be aware that claims for outdoor fixtures such as air conditioning units, solar panels, and satellite dishes may be paid less a deduction for wear, tear or depreciation – rather than strictly replacement cost – so bear in mind that a claims settlement might not cover the cost of a new unit.
All of this information – and much more – is usually within a few pages of your policy wording. Policy wordings are laid out in a multitude of ways, but often the conditions and exclusions which apply to all coverages are nearer the end of the document. These warrant close attention as well.
One condition that will come up during hurricane claims is that you must take reasonable steps to prevent loss or damage, and that you will maintain your property in a sound condition. In a similar vein as this condition, there is an exclusion on the policy that removes cover for wear, tear, rust, corrosion or any other gradually operating cause. There is also an exclusion on all local policies for mold. This means that if a small corner of your roof is damaged in a storm but the whole roof needs to be replaced due to rot, insurers may cover the damage from the small corner, but not to replace the rest of the roof.
There is almost always a condition in your policy that requires you to notify your insurer – in writing – of claims as soon as is possible. People are often tempted to hold off on filing a claim until they’re certain that the repair bill will exceed the deductible – there’s no need. If once you have estimates from contractors it transpires that the claim will be relatively small, you can close the claim without a problem.
The fine print in a policy wording isn’t meant to be unfairly restrictive to clients, but it does still exist and clients and insurers are held to those terms and conditions. If you don’t have a copy of your policy wording, ask your insurer for one. They should supply it without challenge – this is a contract that you’ve paid for, after all! And then, if you have questions, ask them – you have every right to understand your coverage.