Study: Watch wording on insurance policies

CHICAGO – Dec. 14, 2011 – Homeowner insurance policies can vary greatly, and if homeowners aren’t careful, they may find their claims denied when disaster strikes, according to a study to be published early next year by the University of Chicago Law Review.

While home insurers once used standard policy forms by the Insurance Services Office, now some are coming up with their own policies and a few tweaks in the wording can mean trouble for some homeowners, according to the study. Homeowners should read the fine print and carefully review their policies to examine what’s covered and what’s not, the study notes. For example, some policies include mold and lead coverage; other policies do not.

According to United Policyholders, here are a few questions homeowners can ask insurance agents when shopping for a homeowner’s insurance policy:

• What is the coverage for water damage from sewer or pipe problems?
• What is the coverage for any damage to the foundation – is it completely covered, limited or excluded completely?
• Will items be paid at “replacement value” or “actual cash value”?

Study author Daniel Schwarcz, a University of Minnesota Law School associate professor, told The Wall Street Journal that he urges state insurance departments to post their insurance policies online so they can be reviewed closer by consumer groups and homeowners. In October, Nevada began posting policy forms for its largest home and auto insurers.

Source: “A Home-Insurance Trap?” The Wall Street Journal (Dec. 3, 2011)

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