CARSON CITY - When it's time to file a claim, you turn to your insurance company.
When you file a claim, your insurance company turns to your policy.
This is because insurance policies are legally binding contracts between you and the insurance company. They dictate what your insurance company covers, how it pays claims and what you must do when filing a claim. When you file a claim, the policy dictates how the company is going to compensate you for your loss.
"What we have seen after the recent fire claims in Reno and Washoe is that it's the exact language of the policy that makes the difference for the consumer," said Insurance Commissioner Scott J. Kipper. "This is why it's so important for consumers to read and review their policies to make sure they know they are buying the protection they want and need. Once you've read your policy, be sure to call your insurance agent or company to ask any questions you may have and discuss your coverage."
The following three tips can help you understand your policy and the insurance you are buying.
1. Read the whole thing
The best way to understand the insurance you are buying is to read your entire policy. You don't have to do it all in one sitting, or even in the same day.
Pro tip: Break it up into small chunks; your policy is typically separated by the types of protection you are purchasing:
Coverage for your home and other structures on your property.
Coverage for increased costs of living while your home is being repaired.
Coverage for your personal possessions.
Coverage for liability.
2. Read the definitions
Your insurance company will define the terms it uses throughout the policy. It is important to read these definitions because often times the definition used by the policy is different than what is used in everyday language.
Pro tip: Throughout most policies the defined terms will be marked in a way that makes them different from the rest of the type. For example they may be bolded, UPPERCASE or in "quotes." Mark the definitions page so that you can reference it as you read the policy.
3. Know what you're reading
For each type of protection you are purchasing, your policy will explain the following:
• Details of the coverage: This will explain all the ways that your policy provides coverage as well as what needs to happen to trigger coverage. For example, your dwelling may be covered only if you live in it.
• Conditions of the coverage: This will explain what you need to do to file a claim and how your insurance company will settle a claim. For example, your policy may require you to protect your property from further damage.
• Limitations and exclusions of the coverage: This will explain what types of loss are not covered or have limited coverage. For example, damage from a flood is likely excluded, or jewelry and electronics may have a limitation of just a few hundred dollars.
Pro tip: Make sure to read every word of your policy, including any special amendments to the policy. Sometimes a policy may provide coverage of a risk in one section only to later exclude or limit it under certain conditions. Use a highlighter to mark any sections of your policy that you would like to reference later. Afterwards schedule an appointment to talk about these sections with your insurance agent or company.
Insurance can be confusing. To help consumers better understand their insurance, the Nevada Division of Insurance has written three guides regarding home insurance to assist consumers: the "Nevada Consumer's Guide to Home Insurance," "Nevada Consumer's Guide to Flood Insurance" and the "Nevada Consumer's Guide to Earthquake Insurance." These guides can be found online at doi.nv.gov/consumer.aspx.
About the Nevada Division of Insurance
The State of Nevada Division of Insurance is the state agency that protects the rights of Nevada consumers and regulates Nevada's $11.6 billion insurance industry. In 2011, the division investigated nearly 2,000 consumer complaints and recovered a record $6.7 million on behalf of consumers. For more information about the Division of Insurance, visit DOI.NV.GOV.
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