The last thing you want to do is learn how to read an insurance policy after you need to make a claim. The fact of the matter is reading an insurance policy can be one of the most sterile reads you have ever had (sample document). It is not like grabbing a warm blanket and reading a New York Times Best Seller. As dry as the read may be it is important that you understand this complex document because in it lies the answer to all of your questions about what is covered under your policy and what is not.To help you gain a better understanding of how to read an insurance policy, State Public Adjuster Randy Smith offers the following tips to reading an insurance document by breaking down the basic anatomy of and insurance policy.
The Most Important Things In An Insurance Policy:
Policy Declarations Page – The policy declarations page is essentially the very first page of the insurance policy. This page lists the nsured policy holder and those covered by the policy as well as the time period covered by the policy. The declaration page also describes what is actually insured, what is covered and the limitations of the coverage.
Policy Definitions – Since these documents are binding the language is important. The policy definitions section gives you the definitions of words and phrases you’ll see in the policy. For example: “Property” and “Deductible” are two terms often found in an home owners policy. The words that you find in the definitions section will usually appear in bold text throughout the entire document so that you can refer back to the definitions pages if you have any questions about a particular element of your document.
Policy Coverages – The policy coverages section describes tells the homeowner specifically what is covered and what parts of the property is covered. This policy coverage page also details what each item is covered for. For example, there may be some part of your insurance policy coverages that states physical damage to garage doors by wind blown objects is or is not covered under this policy. There will be details of policy coverages that you should be familiar with before filing a claim.
Policy Exclusions – The policy exclusions describe what is limited by the insurance policy or how existing coverage may be forfeited due to how a loss occurs. For example, in the event of misuse of a covered item or damage beyond that of normal wear and tear, may be a policy exclusion. Insurance companies may allow policyholders to purchase additional coverage for some exclusions at a higher premium. For example, earthquake coverage may be excluded for people who live in an area where earthquakes are unlikely to happen like Texas. However, if a customer would feel more comfortable with the coverage, they could buy it back. Residents of California may not need Hurricane insurance but might opt to buy it at a premium.
Policy Limits and Special Limits – The limits and special limits section of the policy is where the insurance company specifies the limitations of what they are willing to pay under certain conditions and certain claims. For example the insurance company may limit the amount of payment to an exact dollar amount or a percentage of a total amount.
Policy Duties After aLoss – This section of your policy tells you what to do in the event you need to make a claim. It may also instruct the policy holders on emergency remedies to prevent further damage to your home or structure.
Policy Endorsements – Additional coverages are listed in the policy endorsements section. Like the policy exclusions section the policy endorsments section would be the place you would find the additional purchase of hurricane and earthquake insurance as stated in our example above.