Avoid Insurance Urprises

- Lucie Amundsen

With something as complicated as homeowners insurance, there’s nothing better than having an insider tell you what’s what. We recently met an expert who’s spent half his life working with insurance claims—as a contractor for homeowners, and later as a claims adjuster.

What he told us has changed the way we look at our policies. And even more important, we now understand the limitations of our coverage.

1. Your garage may not be fully covered

Policies are set up to insure your main structure and whatever is physically attached to it. This would include an attached garage but NOT a detached garage. Structures like stand-alone garages and sheds are typically covered at only 10 percent of your main dwelling coverage. So, if you carry $200,000 of coverage on your house, your detached garage would be protected only up to $20,000.

Our expert says this is a perfect situation for an “endorsement” to add coverage (see “Vocab,” below). Typically, the upcharge is nominal for the increased coverage.

2. Terms frequently change

Occasionally, letters arrive from your insurance company. If you’re like most people, you don’t read them. But understand this: Insurance companies are constantly fiddling with your contract. And those letters legally inform you of changes—usually new exclusions. In the fine print, the company puts the onus on you to call if you want to restore the coverage through an endorsement. Often, that’s a call worth making.

3. Beware of storm chasers