Navigating through your Insurance Policy

Does sifting through your 130-page insurance policy give you a headache? Most people do. This article is here to help you navigate through it.

An insurance policy is a contract that defines the obligations of both the insured and the insurer.

Every insurance policy has five parts:

• Declarations

• Insuring Agreements

• Definitions

• Exclusions

• Conditions

Many policies contain a sixth part: endorsements.

The first page of an Insurance policy is called the Declarations Page. Now the Declarations can sometimes be more than one page, but typically your main source of information is listed on the first page of the Declarations. It summarizes key information specific to the policy.

The declarations page shows:

• Insured's name and address

• Policy dates

• Brief description of the business

• Coverages provided and their limits

• Premiums

• Forms applicable to the policy.

Most policies are now digital, but the Dec page is worth having a print-out of for quick and easy access to information.

Next up is the Insuring Agreement. Now Insurance is defined as a practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium. In the Insuring Agreement, the insurer agrees to do certain things such as paying losses for covered perils, providing certain services, or agreeing to defend the insured in a liability lawsuit. The perils that are covered are found in the Insuring Agreement of the policy. The covered peril you are probably most familiar with is Fire damage.

Up next we have the Definitions. Insurance policies contain many common words that have special meaning within the context of Insurance. The policy identifies these words usually by bold print or quotation marks. The definitions section explains the special meanings of these designated words. This is a commonly overlooked section, but it is highly advised to read through to better understand your Insurance policy.

While there are many coverages provided in an Insurance Policy, there are also Exclusions. They are another important part of an Insurance Policy. The name itself is self-explanatory. Exclusions are the cases for which the insurance company does not provide coverage. A common exclusion on many commercial policies would be liability for injuries covered by other policies, such as injuries to your own employees and liability for activities not really a part of your business, such as playing on the company softball team.

Lastly, we have the Conditions. The Conditions section of an insurance policy is one that identifies the general requirements of an insured and the insurer on matters such as loss reporting and settlement, property valuation, other insurance, subrogation rights, and cancellation and nonrenewal. A common example is how to report a loss if a claim were to arise.