It’s a common misconception insurance shoppers only need to examine a few factors when comparing policies. They look at the premium, the limits, and the coverage type, and determine their price tag is the only difference.
In reality, it’s far more complicated. Insurance policies are contracts, and there’s more to them than premiums and limits. To truly compare insurance policies, you need to take a look at these contracts. Let’s examine the three parts of an insurance policy and what information you need to really compare policies.
The Declarations Pages
The declarations pages contain the policy’s basic information. It states the limits, the premium, the beginning and end dates, the named insured, the company’s name, and the agent’s name. While it contains a lot of important information, it only contains broad strokes.
It won’t tell you anything about what is and isn’t covered, what to do after you file a claim or any other practical information. To find that, you’ll have to look at the other two sections.
The Policy Form
The policy form contains the policy’s bulk and most of the relevant information. It has legal definitions, in-depth descriptions of what’s included, and the policy’s terms and conditions.
It’s also important to note that many different companies use the same policy forms. There are, however, a lot of companies that don’t use standard policy forms. Whether or not the insurance provider uses a standard form can make a difference. Moreover, it’s easier to compare two quotes using the same standard form.
It’s also important to note that the policy form and policy type are not the same things. A homeowners insurance policy can be written in a standard or non-standard form.
Endorsements are changes to the main policy form. These can give coverage, take away coverage, or simply clarify coverage. Some will even include instructions about what to do once you’ve filed a claim or what to do during the policy period.
It’s especially important to compare these when you have two quotes with the same policy form but different prices. The lower-priced policy may exclude certain kinds of coverage to cut costs. If that’s the case, you’ll find it in the endorsements.
It’s important to ask for the endorsements list since many agents will only include them upon request.
You’ll have to examine each section to determine if you’re getting everything you need from a policy. If one policy is cheaper but excludes something you need to be covered, then it’s not the policy for you.
You’ll want to consult a trusted insurance advisor to help you decide exactly what policy you’re getting. Your insurance advisor should help you make the best buying decision for you. If you don’t have a trusted insurance advisor, or would like a second opinion, feel free to reach out to D&A Insurance!