An insurance policy is a legal contract that transfers your risk of significant loss to an insurer in exchange for premiums. It includes a description of the coverage promised and an explanation of exclusions and conditions.
Bundling policies typically saves money and simplifies management of your various insurance needs, but cost shouldn’t be the sole factor in selecting the right policies for your risks.
The Insuring Agreement
The insuring agreement is a section that clearly specifies what perils or risks the insurance company will cover in exchange for premium payments. It is the main part of a policy document and will be referred to by both the insurer and the insured in case of a claim. It should be read carefully to ensure that it accurately represents what the policyholder wants from their coverage.
Depending on the type of insurance being purchased, the insuring agreement may include one or more clauses specifying what is covered, along with exclusions and conditions. The insuring agreement is usually a section early in the policy, after the declaration page but before other sections that state exclusions, conditions, and definitions. Reviewing the insuring agreement and understanding its specific terms is a best practice to minimize disagreements with an insurance carrier or, should a dispute arise, a court about coverage.
Insurance policy terms that are particularly important in determining the scope of coverage are defined in a separate section. These definitions will be distinct in some way from other words in the policy, such as being bolded or written in quotation marks. It is imperative to read these definitions to understand what each term means, as this will be the basis for deciding whether a loss is covered by a particular policy and how much coverage the insurance provider will provide.
Insurance policies can also contain endorsements or riders that modify the original policy language. These are added to a policy to reverse exclusions or impose new conditions and are not to be ignored when reviewing coverage options. For example, a homeowners’ insurance policy may include an endorsement that adds water damage or earthquake coverage while a directors and officers liability (D&O) insurance policy might contain Side A, Side B, and Side C which are clauses that reverse different exclusions for a more comprehensive policy.
The Declarations Page
A declarations page outlines the essential policy information you need to understand your coverages and responsibilities. It’s usually the first page of your policy, and it summarizes key details like policy limits and premiums. You’ll receive a declarations page automatically when you purchase home or auto insurance. Many insurers also make it easy for you to access your declarations page online through a web portal.
Your home insurance declarations page lists policy features unique to your home, including mortgage lender details and insured property information such as square footage and age. You’ll also find the home insurance policy number, expiration date and coverage limits listed on your declarations page. If you want to see how much your policy costs, you can also review the policy’s premium on your declarations page.
An auto insurance declarations page is similar to a homeowners policy’s, but it typically lists the policy period and policy numbers, as well as the insured drivers, vehicles and elected coverages. It may also include other relevant information such as the vehicle year, model and VIN. Your auto insurance policy also contains a list of your selected deductibles.
Insurance declaration pages can be used to verify coverage to third parties such as mortgage lenders, leasing companies or rental car agencies. You can submit a copy of your insurance declarations page when filing a claim, renewing your policy or switching providers.
You can use your insurance declarations page to verify the coverages and responsibilities of your home or auto insurance, which can help reduce stress during claims situations or when reviewing policies with other providers. However, you’ll still need to read your entire policy carefully and speak with an agent about any specific questions you have.
The Exclusions
As its name implies, the Exclusions page outlines which losses and events are excluded from the policy. Most exclusions are found after the main coverage sections of a standard home or renters insurance policy (named perils, personal property, additional coverage, and medical payments to others), but they can also appear in the definitions, conditions, and endorsements pages. Thoroughly reading the entire policy and paying special attention to the exclusions page can help you avoid unpleasant surprises if something unexpected happens to your property.
The purpose of exclusions is to balance insurance coverage for fortuitous loss versus the need for insurers to remain solvent and affordable for a large number of policyholders. Exclusions can include anything from excluding specific causes of damage (such as terrorism or war) to limiting the amount of coverage for certain kinds of loss (like water damage caused by an overflowing toilet).
In general, exclusions are designed to manage risks that are too high to insure without raising premiums so that insurance is more widely available and affordable. They can also be used to encourage responsible behavior by excluding damages resulting from negligence or poor maintenance.
Some exclusions are specifically related to life insurance policies and can prevent beneficiaries from receiving payouts in the event of the policyholder’s death. Examples of these types of exclusions include suicide, illegal activities, and undisclosed health conditions.
A common cause of false positives in endpoint protection tools like Microsoft Defender for Endpoint or Cisco Security Solutions is the presence of an exclusion list. This is because lists can be configured to exclude directories, file extensions, file paths, processes, applications, threats, or indicators of compromise from scanning, which can improve performance and reduce the workload on SOC teams.
The Conditions Section
Insurance policies can be intimidating at first glance. They often contain a lot of legal language and sections that frequently cross-reference each other in confusing ways. But reading an insurance policy is a lot like reading any other type of contract, and like most contracts, there are specific parts that you need to understand in order for the document to be effective.
The five key parts of a policy are the declarations page, insuring agreement, definitions, exclusions and conditions. The declarations page is the first part of your policy and includes the basic information such as the name of the insured entity, address of the insured location(s), the amount of coverage requested, premium, deductibles and policy period. It also lists the name and contact information of the agent or broker who negotiated the policy. It is important to verify the accuracy of this information.
After the declarations is the insuring agreement, which states the insurer’s promise to pay for covered losses. It is important to read the insuring agreement closely because it will help you identify potential gaps in coverage or limits of liability. You should also note any emphasized words in the insuring agreement that are in bold-faced font, italics or in quotation marks. These words are meant to highlight that the word has a defined meaning for purposes of the policy and should not be used in another way.
The next section is the Conditions section, which outlines the duties that both you as the insured and the insurance company must fulfill to maintain coverage. These can include things such as filing a proof of loss promptly, maintaining a specified level of care for your property or cooperating with the insurance company during a claim. Failure to meet these obligations may result in the denial of a claim or even a cancellation of the policy.
