Insurance Policy

An insurance policy is a legally binding agreement between the insured (the person or people), business, or other entity, and the insurance company (the insurer). Understanding your policy’s obligations and those of the insurance company in the event of a loss will help you confirm that it fulfills your needs. When buying an insurance policy, many insureds do not realize what is covered, what is not covered, and what requirements need to be fulfilled for coverage to kick in in the event of a loss. In the event of a loss, we would like to remind customers that reading and comprehending your entire policy can help you avoid issues and disputes with your insurance provider.

The Basics of an Insurance Contract

There are four basic parts to an insurance contract:

  • Declaration Page
  • Insuring Agreement
  • Exclusions
  • Conditions

It is crucial to realize that various types of coverage, such as liability, collision, and medical payment coverage, may have particular exclusions and requirements for multi-peril policies. It is important that you carefully review the terms of the particular coverage that pertains to your loss.

The Declaration Page

An insurance policy usually begins with this page. It specifies the policy limits, the insured person, the risks or property covered, and the policy period (i.e., the length of time the policy is in force). 

For example, the Declarations Page of an automobile policy will include the description of the vehicle covered (e.g. make/model, VIN number), the name of the person covered, the premium amount, and the deductible (the amount you will have to pay for a claim before an insurer pays its portion of a covered claim).

Comparably, the name of the insured and the face amount of the life insurance policy (e.g., $25,000, $50,000, etc.) will appear on the Declarations Page of a life insurance policy.

The Insurance Contract

This outlines the main assurances provided by the insurance provider and outlines the coverage. The insurer undertakes certain obligations in the Insuring Agreement, such as paying claims for covered perils, offering specific services, or consenting to represent the insured in a liability action. An insurance agreement can be in one of two basic formats:

  • Named-perils coverage, which limits coverage to those hazards mentioned expressly in the policy. If the peril is not listed, it is not covered.
  • All-risk coverage, which covers all losses with the exception of those that are expressly excluded,. The loss is covered if it is not excluded. Policies for life insurance are usually all-risk policies.

The Exclusions

Exclusions take coverage away from the Insuring Agreement. The three major types of Exclusions are:

  • Excluded perils or causes of loss
  • Excluded losses
  • Excluded property

Typical examples of excluded perils under a homeowners policy are flood, earthquake, and nuclear radiation. A typical example of an excluded loss under an automobile policy is damage due to wear and tear. Examples of excluded property under a homeowners policy are personal property such as an automobile, a pet, or an airplane.

The Conditions 

Conditions are clauses added to the policy that restrict or qualify the insurer’s obligation to pay or provide services. The insurer may reject the claim if the requirements of the policy are not fulfilled. Common policy conditions include the need to preserve property following a loss, provide proof of loss to the company, and assist the company in the course of its liability lawsuit defense or investigation.


A Definitions section that defines terms used in the policy is typically included in policy documents. It could be a stand-alone segment or a subsection of another segment. Read this section carefully to ensure that you understand the terms used in the policy.

Endorsements and Riders

When a policy is renewed, an insurer may alter its terms or scope of coverage. Endorsements and Riders are written clauses that amend, supplement, or remove clauses found in the original insurance policy. The insurer must provide you with a copy of any policy modifications in the majority of states. In order to know how your policy has changed and whether it still meets your needs, it is crucial that you read all Endorsements and Riders.

Want to review your policy? 

Please get in touch with your insurance company or agent to obtain a copy of your policy.


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