A declarations page is one of the most important homeowners insurance documents. It is a summary of the policy’s inclusions and exclusions. It lists the name and address of the policyholder, the type of insured property, the policy period and policy premium amounts.
The declarations page lists specific homeowners insurance coverage limits. For instance, the declarations page summarizes the maximum dollar amount the insurance company will pay for a total loss of the insured dwelling.
Contents Coverage
Contents coverage refers to the coverage provided for the personal belongings within the insured dwelling. Contents include furniture, electronic equipment, clothing, dishes, appliances and all other personal property. Contents coverage is automatically provided in a homeowners insurance policy. Policyholders may choose the amount of coverage based on the amount of personal property they own.
Replacement Cost
Homeowners policies indicate if contents are insured for their replacement cost or for their actual cash value. This is very important terminology to understand, because it determines how much the policyholder will be reimbursed in the event of a total loss. Items insured at replacement cost pay the dollar amount needed to replace damaged personal property. Items insured for their actual cash value only receive the depreciated amount of personal property, which may not be enough to replace the destroyed item.
Liability Insurance
Homeowners insurance policies contain a coverage dedicated to the protection of the policyholder’s legal obligations. Liability insurance covers the homeowner in the event his negligence caused damage or harm to another party. For example, if a party guest slipped and fell on the insured’s premises and sustained an injury, the liability portion of the homeowners insurance policy pays the guest’s medical expenses, pain and suffering and, if necessary, legal fees and court costs if the policyholder is sued.
Perils
A peril is a specific risk or cause of loss. Perils are the reason policyholders purchase insurance. Homeowners insurance policies cover perils such as fire, theft, windstorms, glass breakage, hail, smoke damage, falling objects, frozen pipes, vandalism and more. Some policies only cover named perils. A named peril is a policy that provides coverage for losses that arise from a specific loss or situation, such as a hurricane or flood.
Policy Exclusions
Certain losses are not covered on a homeowners insurance policy for many reasons. Losses that do not receive coverage are referred to as policy exclusions. A policy exclusion is a provision that eliminates coverage for a specific type of risk or piece of property. In some homeowners policies, for example, wind-related coverage is excluded for homes located in disaster-prone areas such as the Florida coast.