Most people just blindly their insurance premiums and hope they’ll never need it.
Obviously, we need insurance for different things in life. Whether it’s for your car, home, or any other expensive belongings, insurance is necessary because it protects you in the event of damage or theft of those things.
When you get an insurance contract from your insurer, you probably glance it over, sign it, and throw it with the rest of your documents. Your insurance agent is there to help you decipher these things, but it’s important that you have some understanding of what you’re signing as well.
Today, we’re going to tell you how to easily understand an insurance contract so you’re not relying solely on what your insurer tells you.
Declarations
The declarations page is the first page in your insurance documents. It states that you’re the person being insured and the period of time that you’re being insured for. You’ll also see the items that are being insured, the primary coverages, and the limits on the coverage.
Defining Terms
The “Definitions” section will help you understand the words and phrases that are stated throughout the policy. For auto insurance, you’ll see the term “motor vehicle” in bold throughout the policy. The term “deductible” is displayed in most property insurance policies as well.
Your Coverage
In your “Coverages” section, you’ll get a more detailed description of the insurance that will be provided. You’ll see a list of all the items that you’re having insured and what they’re insured against. In the event of a loss, you’ll need to account for everything listed.
If it’s an auto insurance policy, you’ll have your motor vehicle insured against an accident, damage, or theft. If it’s a home owner’s insurance policy, you’ll see your home and the belongings in it insured against natural disaster, theft, and any additional damages.
Exclusions
Exclusions will detail the limits of your coverage or any situations where coverage would be eliminated. In certain situations, policyholders can buy additional coverage for certain exclusions.
This would happen if your policy states that you’re not covered in the event of a flood, but you live in an area that experiences regular flooding.
Duties
Conditions instruct the policyholder on what their responsibilities are, as well as what the insurer’s responsibilities are. You’ll see things like how to cancel the policy, transfer the duties, or instructions for payment plans.
Duties After a Loss
After those general duties, you’ll see instructions on what to do after the loss aka how to file a property damage claim. It’s basically just telling you that you need to notify the police as soon as possible and the insurer as soon as it is convenient.
Endorsements
This is where you’ll see the optional additional coverages. You can opt-in to add-ons as they suit your personal needs and the insurer may add things to better clarify certain parts of your policy.
It’s Not So Bad After All
Every policy is a little bit different, so you’ll need to discuss each section with your insurer to get an idea of the specifics. However, this guide gives you a simple rundown of how to understand a general insurance policy. We understand how abstract it can be in the moment, so that’s why we’re here to translate.
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