This post was written by Pat Long of Eldredge & Lumpkin Insurance Agency
There's been more than one occasion when a customer called or visited to report a claim, and I have had to tell them they are not covered. Talk about a very uncomfortable conversation!
Insurance is an intangible; you don't need it until you need it. You pay premiums, sometimes high premiums. And often you never use the coverage. So, when you have a claim under homeowner's insurance, auto, liability, or worker's compensation, you want it covered, right? Then why are some claims not covered by insurance?
Policies as Contracts
An insurance policy is a legal contract between you, the insured, and the insurance company. You sign the application and pay the premium, and the insurance company sends you a policy. All policies define who the insured is, and they tell what the company is willing to cover. But sometimes coverage and claim do not match.
These are specifically noted perils that the company will not cover. For example, some homeowner's policies exclude coverage of flood damage. Many people in Louisiana did not understand this when Hurricane Katrina hit. You can purchase a separate flood policy, but flood damage is not covered by the basic homeowner's policy.
These are general rules or procedures that the insurer and insured agree to follow, under the contract. When you sign the application and pay the premium, you agree to these conditions. For example, did you know you have duties after a loss? In order to claim a loss, you need to promptly notify the insurance company or agent; some policies have specific notification deadlines. If you have theft coverage, you're required to notify the police. If a tree falls on your home and opens a hole in the roof, you must protect the property from further damage and make reasonable and necessary repairs to protect the property. Most policies require you to cooperate with investigations and settlements. If you don't meet these conditions, the insurance company can deny the claim.
So what's the best way to make sure you are properly covered? Simply think about what is important to you:
- Do you worry about cost of health care when you get older?
- Are you concerned about your 16-year-old son or daughter driving?
- Have you inherited an heirloom and wish to pass it on to your family?
- Do you have an older home with systems that no longer meet state requirements?
- As a business person, have you just signed a contract to build three more homes?
- Do you have an office in your home?
Ask your insurance agent how best to cover what is important to you. Taking a proactive approach to insurance may avoid the discomfort of the "you're not covered" discussion.