How to Read Your Homeowners Insurance Quote and Policy
When comparing homeowners’ insurance quotes, most people look at the bottom number first: the premium. The price matters, but what coverage are you getting for that price?
Cheapest is not always better. Before you decide, compare the coverage limits, deductibles, and exclusions. You want to know what your policy will pay for—and what you may have to pay yourself.
Here are the main things I suggest reviewing.
In This Article
Start With Your Declarations Page
Your policy’s page of declarations summarizes your coverage limits, deductibles, premium, and other important information. Your quote should include many of these same details.
This is a good place to start, but it does not tell you everything. You also need to review the policy forms and endorsements, which can add, change, or limit coverage.
Deductibles: What Will You Pay Out of Pocket?
Your deductible is the part of a covered loss you are responsible for paying.
An all-other perils (AOP) deductible generally applies to covered losses that do not have a separate deductible. It does not mean everything is covered.
Some policies have separate deductibles for wind and hail, named storms, or hurricanes. These may be a dollar amount or a percentage of your dwelling coverage limit.
For example, if your home is insured for $300,000:
A 2% deductible is $6,000.
A 5% deductible is $15,000.
That percentage is generally based on the insured value of your home, not the amount of damage.
A policy might have a 2% wind and hail deductible and a 5% hurricane deductible. Which one applies depends on the policy’s wording and the storm. Ask your agent to explain when each deductible applies.
Deductibles are one of the most important things to compare when getting a homeowners insurance quote. A lower premium may come with more out-of-pocket expenses when you have a claim.
Under Louisiana Revised Statute 22:1337, qualifying homeowners policies apply separate named-storm or hurricane deductibles on a calendar-year basis. If multiple qualifying storms cause damage during the same year, the deductible for a later claim may be the greater of the remaining storm deductible or the all-other-perils deductible. Keep claim records and repair receipts so your insurer can determine how the law applies.
Coverage A and B: Your Home and Other Structures
Coverage A is your dwelling coverage. This covers your home and attached structures against covered losses.
The limit should reflect what it would cost to rebuild your home. That is different from its market value or what you owe on your mortgage. Insurance companies have requirements for how much replacement cost coverage you must carry, so lowering this amount may not be an option.
Coverage B is other structures coverage. This generally includes structures that are separate from your home, such as fences, detached garages, and sheds.
If you do not have other structures, ask your agent whether this coverage can be reduced or removed and whether doing so would save you money. Some companies include it as part of the policy and do not allow you to remove it.
Coverage C: Your Personal Belongings
Coverage C is personal property coverage. This helps cover your belongings, such as furniture, clothing, and electronics, after a covered loss.
I suggest taking a home inventory. Go room by room and think about what it would cost to replace everything. It adds up faster than most people expect.
Also, ask whether your belongings are covered at replacement cost or actual cash value. Replacement cost coverage generally pays to replace covered items with similar new items, subject to the policy terms. Actual cash value takes depreciation into account.
Some belongings have special coverage limits, particularly for certain types of losses. If you own valuable jewelry, firearms, fine art, or other expensive items, talk to your agent. You may be able to increase the limits, schedule individual items, or purchase a separate policy.
Coverage D: Loss of Use
Coverage D is loss of use coverage. This can help pay additional living expenses if a covered loss makes your home unlivable.
For example, it may help with temporary housing and extra food costs while repairs are being made. It generally covers the increase over your normal living expenses, not every expense you have.
Check both the dollar limit and any time limit. You want to know how much help is available if you must stay somewhere else for an extended period.
Coverage E: Personal Liability
Coverage E is personal liability coverage. This can help protect you if you are legally responsible for someone else’s injury or damage to their property.
It can also help with legal defense costs for covered claims. This coverage may apply to certain incidents away from your property, too.
Talk to your agent about whether your limit is enough and whether an umbrella policy would make sense for you.
Coverage F: Medical Payments to Others
Coverage F is medical payments to others. This can help pay certain medical expenses when someone else is injured in a situation covered by your policy, regardless of whether you are legally responsible.
It usually has a smaller limit than personal liability coverage. Ask your agent how it applies and who is eligible.
Exclusions and Endorsements: Read the Details
Exclusions and endorsements are among the most important parts of your homeowner’s insurance policy.
A quote may list them under “forms and endorsements,” but it may not explain what they mean. Ask your agent which ones limit your coverage.
Here are two examples I would pay close attention to.
Limited Water Damage Coverage
Some policies limit coverage for certain water damage claims.
For example, a covered pipe break in your attic causes $58,000 damage, but your policy has a $10,000 limit that applies to that loss. You could be left paying a large part of the repair bill. The actual payment would depend on the deductible and policy terms.
Ask what types of water damage are covered, what limits apply, and whether a higher limit is available. A pipe leak, sewer backup, and flood are different situations and may need different coverage.
If the company requires a water damage limit, I suggest asking for the highest limit available and comparing your options.
Do not confuse water damage coverage with flood insurance. A standard homeowners insurance policy does not cover flood damage. Even if you have coverage for a broken pipe, that does not mean you have coverage for flooding. Ask your agent about a separate flood policy.
Actual Cash Value or a Roof Payment Schedule
Check whether your roof has replacement cost coverage, actual cash value coverage, or a roof payment schedule.
With actual cash value (ACV) coverage, the company deducts depreciation when calculating payment for covered roof damage. That can leave you paying much more than your deductible to replace the roof.
A roof payment schedule sets out how much the company will pay based on factors such as the roof’s age or material. For example, a schedule might provide 70% of the covered replacement cost, with the deductible and other policy terms also affecting payment.
Depending on the age and condition of your roof, these terms may be required by that company. Still, ask your agent about other options. Another policy may cost more but provide better coverage when you need it.
Compare More Than the Premium
These are just a few examples. A homeowners insurance policy has other limits, exclusions, and conditions that deserve attention.
If you shop on price alone, you may find out after a loss that your coverage is less than you expected. An insurance policy is a contract. What it covers—and how much it pays—depends on that contract.
Before choosing a policy, make sure you understand your deductibles, coverage limits, and how claims will be paid.
About TWFG Landeche Insurance
At TWFG Landeche Insurance, we help Louisiana homeowners understand their insurance options. If you need a homeowners insurance quote or would like us to review your current policy, we can help explain the coverage, deductibles, and limits that may apply.
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Hi, I’m Ronnie — founder of Landeche Insurance. I’m a lifelong Louisiana resident who believes insurance should be honest, local & easy to understand.
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