By: Mary Thompson, Capstone Brokerage President, May 30, 2017

Understanding insurance can be tricky especially when it comes to understanding the wording in your policy. A insurance policy is a contact between the policy holder and the insurance company providing the insured, insurance. A few common sections of a policy include a declaration page, definitions, insuring agreement, exclusions, conditions, exclusions, and riders.

Declarations Page: commonly referred to as the “Dec Page” includes the basic information such as address, the insuring company, what risks or property are covered, the policy limits (amount of insurance), any applicable deductibles, the policy period and premium amount.

This explain common terms used throughout the policy. Here are a few definitions you may see.

Here are some common terms.
▪ Claim- The formal request by a policyholder or claimant to be paid under the terms of the insurance policy.
▪ Deductible- An excluded amount or threshold for payment on an insurance policy. A $500 deductible would mean the insurance policy would start paying after they have deducted the first $500 they owe you.
▪ Effective Date- The first day of a policy term. Denotes the beginning of the insurance coverage.
▪ Named Insured- The person or persons designated as the insured in an insurance policy.
▪ Peril- The cause of a loss. Examples of perils are fire, wind, an accident and acts of vandalism.
▪ Policy- A formal contract outlining the terms and conditions of the insurance provided by an insurance carrier.
▪ Premium- The amount you are asked to pay for an insurance policy.
▪ Renewal- A new policy which replaces one that is expiring or cancelled.

Insuring Agreement: Describes the risks assumed, or nature of coverage for the policy being provided.

Exclusions: Share with the insured the items or overages that are no included in the policies scope of coverage. This can include hazards, risks and losses that are excluded form the policies coverage.

Conditions: This section will explain the rules of conduct, duties and obligation s to which the insured is agreeing to adhere to to be complaint with the policies coverage. This section is important to understand.

Endorsements: In the endorsement section if applicable there will be attached forms to the policy that modify it. Often when a change is made to existing coverage and endorsement is used. The technical nature of endorsements can be confusing and should be discussed at length with the broker to help maintain understanding of the policy.

Riders: Although not every policy ill have a rider this section is used to convey terms of a policy amendment. Riders will be numbered and dated. Riders are most common on health insurance policies.

Policy Form: This is basically a combined section that integrates all parts of the policies coverage in one place. Expect to see the definitions, insuring agreement, exclusions, and conditions are combined into a single integrated document called a policy form, can also be titled the coverage form, or coverage part.

Now insurance is really unique in that everyone needs it, and some never use it. Nobody lives a risk-free life where accidents never happen. That’s why even though you may not work in the insurance business, it’s important to understand your insurance policy and all sections enclosed. Discuss your policy with an educated insurance broker if you have any questions about the verbiage, coverage or just for a general understanding of the policy.