Most homeowners don’t open their insurance policy until something goes wrong. By then, it’s too late to understand what you’re actually covered for — and insurance adjusters know it.
This guide walks you through the key sections of a standard homeowners insurance policy so you know exactly what you have before you need it.
The Declarations Page (Dec Page)
This is the one-page summary at the front of your policy. It shows your coverage limits, your deductible, your premium, and the policy period. If someone asks “what’s your coverage limit?” — it’s on the dec page.
Key things to check on your dec page:
- Dwelling coverage (Coverage A): This is what covers the structure of your home. Make sure it reflects current rebuild cost — not what you paid for the house.
- Personal property (Coverage C): Covers your belongings. Most policies cover 50-70% of your dwelling limit. If you have high-value items, check if you need a rider.
- Loss of use (Coverage D): Pays for living expenses while your home is being repaired. Critical if you have a major fire or flood.
The Exclusions Section
This is where policies get complicated. Standard homeowners policies exclude floods (you need separate flood insurance), earthquakes, and in some cases, sewer backup. Water backup coverage is often a separate rider — and many Michigan homeowners find out too late that they don’t have it.
Replacement Cost vs. Actual Cash Value
This is one of the most important distinctions in any policy. Replacement Cost Value (RCV) pays what it actually costs to replace your damaged property with new materials. Actual Cash Value (ACV) pays replacement cost minus depreciation.
If your 15-year-old roof gets destroyed in a hailstorm, an ACV policy might pay you a fraction of what a new roof costs because the old one was “depreciated.” An RCV policy pays for the new roof.
Always check: does your policy pay RCV or ACV for your dwelling? For personal property?
Ordinance and Law Coverage
This rider covers the cost of bringing your home up to current building codes during a repair or rebuild. Without it, you could be stuck paying tens of thousands of dollars out of pocket for required upgrades after a loss. We’ve seen this catch Michigan homeowners completely off guard — especially on older homes.
What Phase III Recommends
Pull your policy out right now. Check your dwelling coverage limit against current construction costs in your area (typically $150-200/sq ft in SE Michigan for standard construction). Make sure you have RCV, not ACV. Confirm you have water backup coverage. And if you’re ever unsure whether a loss is covered — call us before you call the insurance company. We’ll help you understand your options.
Phase III Construction | (734) 237-7322 | Serving Wayne, Oakland, Washtenaw & Livingston Counties