Reading an insurance policy can be difficult. The terminology can be fairly complex, but it is an essential document that tells you what is, and what is not, covered.
Many insurance companies have taken on board that the document can be difficult to understand and have provided simplified information as a result. However, it is still important to review the documents and here is an easy guide on the common parts of your policy.
The Insurance Declaration Page
This may also be called the dec(k) page – it is the first page of your policy package and gives all the basic information including:
- Who is insured
- The coverage period
- What is covered and the limits of your cover.
This is basically a dictionary of all the terms, words and phrases you will see in the document. Things like “motor vehicle” or “deductible” and other terms that are used frequently are explained here and any term included in the definitions page are identified throughout the document in bold.
This is the section that specifically deals with the scope of the insurance provided. It is a comprehensive list of what is covered, and for how much. For example, it might provide physical damage/loss cover to the vehicle and include other items like portable equipment or property. It also indicates if there is liability cover.
Exclusions from coverage
This section details the limits of the cover or if coverage is likely to be removed if a loss occurs in certain ways. This often includes things that are seen as high risk. For example, if you live in an area where earthquakes are common, this is unlikely to be included in a standard policy, but you could have the opportunity to pay extra and buy the coverage back.
Limits and special limits to cover
This section deals with exactly how much an insurer will pay for specific types of loss or damage, to specific types of property. It may be that although you have covered your car or home, the insurer will only pay out to a specific amount, or perhaps a percentage of the entire claimed loss.
This section details the responsibilities of yourself as the customer and those of the insurer. This section will give details on how a policy can be canceled, payment plans and how to transfer any rights or duties.
Your duties after a loss occurs
If a loss occurs, this section can give helpful information about what to do. It will always include contacting your insurer, and also things like protecting the property from further loss and contacting the police if appropriate.
These show additional benefits that can be purchased and can help modify an insurance policy to better fit your specific needs. The insurance company can add something called “amendatory endorsements” in order to clarify any aspect of the policy or meanings but these are made free of charge.