Learn more about the individual pieces that make up your personal insurance policy.
In the world of insurance, there are a lot of moving parts that all come together to make up your personal policy. Our goal at Lowry Insurance is always to share information and help not only our clients, but everyone learn the details and gain a deeper understanding of their policies and the coverage that they provide - that all starts with the basics!
As defined by Investopedia, a policy is a contract in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. In short, these policies are use to cover mistakes and accidents, both big and small, that are simply a part of life. Coverage can help protect the financial impact of anything from property damage to healthcare costs incurred as a result of damage or injury caused to a third party. These are just a few examples of how a policy can help provide protection in a variety of cases.
Insurance policies have a variety of pieces and parts, all coming together to create a document representing the coverage that provides reassurance throughout the year. Taking time to read, process, and understand this policy is an important step in helping understand the responsibilities that your insurer have in the event of a loss. Having a comprehensive understanding of your coverage helps address any potential disagreements that you may have with your provider and ensure that you've got comprehensive coverage for the areas of life that are important to you.
This is the first part of an insurance policy, defining who is insured, the risks and property that may be covered, the policy limits, and the policy period. This is the "executive summary" of your policy, providing a high level overview with the basics of everything that should be at top of mind when considering your personal policy.
In the case of a home insurance policy, the Declarations Page would include information about the home, the policyholder, the total premium, and the deductible that the policyholder will pay for a claim before a payout from the insurance provider.
This portion summarizes the insurance company's side of the agreement, stating what is covered by the policy. The insuring agreement showcases the insurer's intent in regards to paying in the event of a loss, provision of services, or their agreement to defend the insured. There are two basic forms of an insuring agreement.
Named Perils Coverage - Only the risks that are listed in the policy itself are covered; if it's not listed, it's not covered.
All-Risk Coverage - All losses are covered except any that are excluded by name.
As the name suggests, exclusions take away from the Insuring Agreement. These generally include exclusions for major cataclysmic events like floods, earthquakes, nuclear radiation, and more. Auto policies will often exclude general wear and tear while home insurance policies often exclusive damage caused by a vehicle, pet, or other unusual source of damage.
These are provided in the policy that validate and limit the insurance company's promise to provide a payout or intervene in certain cases. In other words, if the policy conditions are not met, the insurer can deny the claim made by the insured. The most common conditions in a policy include the requirement to file a proof of loss, protecting property in the event of a loss, and cooperation with the company during the investigation period.
Definitions - Definitions are included in policies to define terms that are used, eliminating chances for confusion and clarifying points made in the other areas of the policy.
Endorsements and Riders - The policy may change at the time of its renewal. Endorsements and Riders are written to add, delete, or modify the provisions in the original contract. Insurers must share a copy of their policy changes - taking time to read and gain a full understanding of any amendments to your policy helps you ensure that it is still comprehensive and up to your expectations.
Whether you're a client of our team at Lowry or a policyholder with another company, it's important to regularly revisit your policy. Taking time to research any changes, connect with your agent, and ensure that your policy still aligns with your personal and professional life is an important part in maintaining comprehensive coverage for yourself and those that your policy impacts.