Know Your Policy
Most homeowners have never read their insurance policy. That's by design — they're dense, jargon-heavy, and intentionally hard to parse. But the policy is the contract, and the contract is what determines your claim.
Get Your Full Policy
What you got when you signed up is usually a declarations page (the "dec page") and a summary. That's not the full policy.
Request the complete policy document including:
- -Declarations page (coverages and limits)
- -All endorsements and riders
- -The base HO-3 form (or whatever form your policy uses)
- -Any amendments
You're entitled to this. If your agent won't send it, call the carrier directly.
Key Coverage Areas
Coverage A: Dwelling
Covers the structure itself. This is what pays for drywall, framing, flooring, plumbing repairs — the bones of the house.
Watch out for: The difference between Replacement Cost Value (RCV) and Actual Cash Value (ACV).
- -RCV = cost to replace/repair with equivalent materials at today's prices
- -ACV = RCV minus depreciation (what the insurer thinks your 10-year-old carpet is "worth" today)
Most policies pay ACV first, then release the depreciation holdback ("recoverable depreciation") when you complete repairs and submit invoices. See Scope Disputes for more.
Coverage B: Other Structures
Detached garage, fence, shed. Usually 10% of Coverage A.
Coverage C: Personal Property
Your stuff — furniture, electronics, clothing. Has its own sublimits for categories like jewelry, electronics, firearms.
Coverage D: Loss of Use (ALE)
Additional Living Expenses. If your home is uninhabitable during repairs, this covers hotel, meals, and other costs above your normal living expenses.
Common fight: Insurers lowball ALE or cut it off too early. Keep receipts for everything.
Coverage E & F: Liability
Not relevant to property claims, but part of your policy.
What's Typically Covered (HO-3)
An HO-3 is an "open peril" policy for the dwelling, meaning it covers everything except what's specifically excluded. This matters — the burden is on the insurer to prove an exclusion applies.
| Covered (unless excluded) | Usually excluded |
|---|---|
| Burst pipes | Flood (rising water) |
| Water heater failure | Earthquake |
| Sudden appliance leak | Gradual wear & tear |
| Storm/wind damage to roof | Mold (often sublimited) |
| Fire, lightning, explosion | Neglect / deferred maintenance |
| Vandalism, theft | Intentional acts |
| Falling objects | Ordinance/law (unless endorsed) |
Endorsements That Matter
These are add-ons to your base policy. If you don't have them, you may be surprised at claim time.
| Endorsement | What it does | Do you have it? |
|---|---|---|
| Sewer/drain backup | Covers damage from sewer line backup into your home | Check — many policies exclude this by default |
| Ordinance or law | Covers cost to bring repairs up to current building code | Critical for older homes |
| Water backup of sump | Covers sump pump failure | Separate from sewer backup in some policies |
| Scheduled personal property | Higher limits for jewelry, art, collectibles | If you have valuables over $1,500 |
| Equipment breakdown | Covers mechanical failure of systems (HVAC, water heater) | Often overlaps with home warranty |
The Language That Matters
"Sudden and accidental" vs. "gradual"
This is the #1 battleground in water damage claims. Your policy covers "sudden and accidental" discharge of water. It excludes "gradual" damage from repeated leaking, seepage, or wear and tear.
The insurer will try to reclassify your sudden event as gradual. Your job is to document that the damage was discovered suddenly, even if the underlying cause may have been developing.
"Efficient proximate cause"
In Colorado, if a covered event sets off a chain that leads to excluded damage, the entire loss may be covered under the "efficient proximate cause" doctrine. Example: a covered burst pipe (sudden) causes mold (often excluded) — the mold damage may still be covered because the covered event was the proximate cause.
"Duty to mitigate"
Your policy requires you to take reasonable steps to prevent further damage. This means extracting water and drying the space. It does NOT mean you have to rip everything out immediately before documentation.
"Proof of loss"
A formal, sworn statement of your claimed damages. Some insurers require this before they'll process your claim. It's a legal document — take it seriously and consider whether you need professional help preparing it.
Reading Your Declarations Page
Your dec page shows:
- -Named insured — who's covered
- -Policy period — when coverage starts and ends
- -Dwelling limit (Coverage A) — the maximum they'll pay for structure damage
- -Deductible — what you pay before insurance kicks in
- -Premium — what you're paying
- -Endorsements — the list of add-ons (check this carefully)
General information, not legal advice. For advice specific to your situation, consult a licensed professional.