Reading Your Policy
When reading your car insurance policy, you must remember to read the entire policy. Coverage may seem to be granted in one section, but restricted or excluded by a later section. Most insurance companies now provide "easy to read policies." This helps the agent, claims representative, and policyholder to know what to expect. It is best to be familiar with each section of your policy. While there are many insurance policies to cover all kinds of property, all insurance policies have the same general parts:
- Policy Declarations (or Declarations (Dec) Page)
- Insuring Agreement
- Definitions
- Coverages, including Exclusions and Limits
- Conditions
Policy Declarations
Definitions
Policy Coverages & Exclusions
Limits & Special Limits
Conditions
Duties After a Loss
Endorsements
Policy Declarations
This is a page separate from the policy jacket, or in some cases an attachment to the policy. It contains the name, address, description of the insured property (home, autos, etc), coverages purchased, coverage limits, and other pertinent information. Additionally, the declarations page (or Dec Page) also states the policy period, including the effective date and expiration date.
Definitions
This section of the policy fully defines words and phrases used throughout the policy. For example: Motor vehicle and Deductible are two terms frequently defined in the auto policy. Whenever these terms are used in the policy, they are boldfaced so that the policyholder knows that these words have a particular meaning in the insurance contract.
Policy Coverages & Exclusions
Policy coverages describe the specific insurance provided, usually by listing what property is covered for what perils. For example: A boatowners policy can cover direct physical loss or damage to the boat and motor, portable equipment, and other property. It can also provide liability coverage. Exclusions is the part of the coverage section of the policy that limits or eliminates coverage otherwise provided in your policy. Insurers often will allow policyholders to buy back coverage for some exclusions. For example: An exclusion for earthquakes would help many consumers avoid additional premium if they reside in a low risk area. However, a policyholder can often purchase separate earthquake coverage, if desired.
Limits & Special Limits
This part of the coverage section explains how much the insurer will pay for particular losses. That is, while a loss may be covered by the insurance, it may be covered for only a limited dollar amount or for a limited percentage of the entire loss under certain circumstances. Conditions
This section of the policy lays out the ground rules by detailing the responsibilities of the insured and the insurer. This includes items such as how to cancel a policy. Frequently, one common condition is subrogation, the concept that once the insurer has paid a claim, the right to recover payment from the at-fault party belongs to the insurer. Conditions may also address monthly payment plans.
Duties After a Loss
Your policy itemizes specific duties of the insured after an accident or loss. These duties may include notifying your insurer as soon as practical, notifying the police in case of theft, and protecting the property from further damage.
Endorsements
These attachments modify the policy to better fit the policyholder’s needs. Amendatory endorsements modify the policy because of changes in the policy language by the company. Excluded perils can be covered with an endorsement to the policy. Endorsements are not restricted to perils. They can also add specific items to be covered or even add an additional driver to an automobile policy. In the case of amendatory endorsements, they may change a policy definition.
