The Homeowners Insurance Application
After you have determined the type of coverage you need, discussed the policy limits and deductibles and asked relevant questions concerning important provisions in the policy, you are ready to fill out the insurance application.
The information in the application is what the insurance company relies on when it decides whether to insure you. You must therefore read every question and answer it HONESTLY AND COMPLETELY. If the insurance company later learns that an answer was wrong or incomplete, it may be able to RESCIND or VOID the contract and DENY your claim.
For this reason, you must carefully read all policy application questions and answers very carefully. If you are unsure of the meaning of a question, ask the insurance company or agent and note any significant response on the application form.
Do not sign the application until you have completed the application and checked it again for accuracy. After you sign the application (usually under penalty of perjury), photocopy the application and keep the copy in your insurance binder or file.
TIP: Some types of insurance contracts contain an Incontestability Clause, which means that the insurance company cannot deny a claim based on a material misrepresentation on the application after the policy has been in effect for a specified number of years (usually two or three). Ask if the policy you are considering has such a clause.
Parts of the Homeowners/Renters Policy
A Homeowners/Renters insurance “policy” typically consists of the application; a declarations page; a definitions section; the insuring agreement; exclusions and limitations sections; policy endorsements; “your duties in the event of loss” section and an arbitration or appraisal section.
The first section is usually the dwelling protection portion, followed by personal property. Liability is usually last.
As with all types of insurance, you really should insist on seeing a copy of the policy before you pay for it while you are with the company representative.
READ your policy before you buy it.
If you find any misstatements or inaccuracies or you see something that you did not expect, call the insurance company or agent RIGHT AWAY and resolve the matter. Take notes on this conversation and save them in your insurance file. Do not wait until you have a claim because by then it may be too late. It is better to resolve the issue NOW than to learn later on that you are not covered.
Some insurance companies use what are called HO Forms to describe parts of the coverage they offer. These forms generally describe Dwelling and Personal Property Coverage, not Liability Coverage. You may be told particular forms cover all situations (with some exclusions), but it is important, and your responsibility, to be ask the questions you prepared even when HO forms are used.
There is little point in keeping insurance coverage that does not cover your situation anymore.
Therefore, keep your insurance policy up-to-date. Have you remodeled your home? Built a new addition or structure on your property? Have you purchased new items or received gifts that should be added to your personal property or other coverage? Has anything changed on your property that poses additional risk to others or to their property? Has your property or other assets increased or decreased in value over time? Has the cost of labor and material increased significantly since you bought your policy?
When circumstances change, notify your insurer.
Some of your updates may not modify your policy or change your premium at all. They simply put the insurance company on notice, and verifies they are aware and have agreed to cover it. Other updates may require you to modify your old policy, purchase a new one or add an endorsement.
Renewals (and Non-renewals)
Once you have been issued an insurance policy and paid your first premium, your Homeowners/Renters insurance coverage begins. Your coverage should continue in effect until the anniversary date of your policy or until the policy says it will end.
Before the insurance policy expires, the insurance company should send you a notice of renewal. Usually, you can renew your policy by simply continuing to pay the premiums. Be sure to read the notice of renewal in case the insurance company requires you to do something more. Before you decide to renew your policy, re-read it to see if it should be updated. And to see if there have been any changes or reductions in your coverage.
Read the Notice of Renewal carefully. It may contain new information about your policy, such as new exclusions or increased premiums.
The insurance company may also elect NOT to renew your policy. It can often do this for any reason. However, most states require that the insurance company give you adequate notice (usually 30-60 days) of its decision not to renew. This is intended to provide you with time to purchase replacement insurance elsewhere.
Keep All Prior Policies
Again, save all copies of prior policies, whether they were with the current company or someone else. Keep these in your notebook or file. They can wind up being very important.
Generally, you may cancel your insurance policy at any time and for any reason. The best way to cancel your policy is to contact the insurance company and notify them of your intention to cancel. If you have pre-paid premiums, you are entitled to a refund of the unused portion.
DO NOT cancel your insurance unless you have already purchased insurance elsewhere. If you cancel a policy and then an accident or disaster occurs, you will not be covered under your canceled insurance policy.
In contrast, in most states the insurance company may only cancel your policy before the anniversary date if:
- You fail to make a premium payment on time (lapse), or
- You make a material misrepresentation on a claim.
If the insurance company cancels your policy because of a premium lapse, it may decide to reinstate you if and when you do pay your premium. If it does reinstate you, may still not have been covered during the period of non-payment. This means that the insurance company may refuse to pay a claim that arose during the lapse.