Elements of an Insurance Policy
Hi, this is Jerry Becerra with Barbary Insurance, and today I’m going to talk about the elements of an insurance policy. You know, I write insurance for a lot of people and they get these packets in the mail that may be 50 pages long and they just don’t understand them but I do encourage people to read their insurance policies and it helps to have an overview of what’s in there and how to go through the document and understand what you’re reading. So the first part that you should be looking at are the declaration pages. Those are the pages that are hand typed or computer generated that actually show you your policy limits and the coverages and they explain a lot of the conditions that the policy was written on. For instance it might indicate your gross receipts or the payroll that it was based on and that’s where you’ll be looking for errors in the policy. Then you get into the policy text and do keep in mind that some policies are actually more than one policy that have been combined together into a single document. This can make things very confusing for people. For instance, under a business package policy there is going to be a property policy and there is going to be a liability policy and they will be married together but they are completely separate documents that stand alone. Each document will have an insuring agreement. Read the insuring agreement. It is a broad sweeping statement explaining what this policy is intending to do. Next there will be coverage descriptions and those are going to include extensions and limitations of coverage. So although they’re not called exclusions, you’re going to find exclusions or limitations in that part of the document. Then we get to definitions. The policy will highlight words and those words that are highlighted have special definitions. You’ll want to read those definitions particularly if those words have anything to do with your business. Go through the exclusions. If often tell people, if you read nothing else, read the exclusions because sometimes you’ll find something in there that you simply can’t live with and then you need to talk to your agent about what you can do about it. Then you get into the policy conditions and the policy conditions have more to do with what both you and the insurance company have to do, what your obligations are. Your major obligation really is to pay your premium and to cooperate with the insurance company in the event of a loss but the conditions are also going to spell out what the insurance company is supposed to do. It will also tell you who you contact in the event of a claim or who you go to if you were going to sue the company and finally there can be endorsements to the policy. An endorsement is a change to the policy and it will often be attached at the end. This is where you make requests and changes to the policy or the company attaches something that limits coverage in some way. So read through the endorsements, they can be very important. Those are the basics. So read your insurance policy and see what you can get out of it.