Watch Wording on Insurance Policies, Study Says

Daily Real Estate News | Monday, December 12, 2011

Homeowner insurance policies can vary greatly, and if home owners aren’t careful, they may find their claims denied when disaster strikes, according to a study to be published early next year by the University of Chicago Law Review.
While home insurers once used standard policy forms by the Insurance Services Office, now some are coming up with their own policies and a few tweaks in the wording can mean trouble for some home owners, according to the study. Home owners should read the fine-print and carefully review their policies to examine what’s covered and what’s not, the study notes. For example, some policies include mold and lead coverage; other policies do not.
According to United Policyholders, here are a few questions home owners can ask insurance agents when shopping around for a home owner’s insurance policy:

• What is the coverage for water damage from sewer or pipe problems? 
• What is the coverage for any damage to the foundation — is it completely covered, limited, or excluded completely? 
• Will items be paid at “replacement value” or “actual cash value”? 

Study author Daniel Schwarcz, a University of Minnesota Law School associate professor, told The Wall Street Journal that he is urging state insurance departments to post their insurance policies online so they can be reviewed closer by consumer groups and home owners. In October, Nevada began posting policy forms for its largest home and auto insurers, according to The Wall Street Journal.
Source: “A Home-Insurance Trap?” The Wall Street Journal (Dec. 3, 2011)