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Why you need to read your policy document?

      - Juanita

You may not find it as interesting as the best selling novels but the policy paper is an absolutely important document as it helps you to understand your policy better. As it says-‘if you don’t know your rights, you don’t have any’, the same holds good for the insurance policy as well. Your knowledge regarding the coverages will determine the fate of your claims in future.

The insurance policy is a legal agreement between the insured and the insurer, where the insured promises to make regular contributions towards the policy and in-return obtains the words of the insurer to receive compensation for the conditions listed in the policy document. The policy deed may, therefore, contain quires of papers explaining the ins-and-outs of the policy. Though the language may vary depending upon the type of the policy you can find the following standard sections in any policy document:

• Declaration
• Insuring agreement
• Definitions
• Policy coverages and exclusion
• Condition

Declaration:

It is like the opening speech of the policy, called the declaration or the ‘dec’. It contains the description of the coverage and also gives you a brief idea about the purpose of the policy. You can find the following information in the declaration page of the policy document;

• The name and the address of the insured (the policy holder),
• Duration of the coverage,
• General description of the items covered
• It also explains the coverages and declares the primary coverage limit

Insuring agreement:

This part is comprised of the proclamation between the insured and insurer. It describes the promises made by the insurance company to cover the damages caused by certain perils and compensate the policy holder in the policy specified ways.

Definition:

The insurance policy is full of terms which are typical of the insurance industry; hence require definitions for better understanding. This section spells out the confusing terms and jargons. It may contain the definitions of the terms like-insured, deductibles, co-pay and so forth.

Policy coverage and exclusion:

The coverage part of the policy document explains the coverage offered by the insurer. It contains detail description of the coverages, its limits, property covered and other related matters.

Exclusions: this segment is very important in terms of knowing the situations under which your coverage may get suspended. Insurers announce the list of the hazards that are not covered under their standard policy in the exclusion part of the document.

Condition:

This section of the document contains the conditions regarding the performance and payment of premium by the policy-holder that will keep the policy in-effect. Violation of any of these conditions can encourage the insurer to deny the claims in the future. It describes the following as well:

• Method to cancel the policy
• Subrogation
• Monthly payments plans
• Duties of the insured after the loss

Endorsements:

The policy document may contain number of endorsements. This chapter will explain the additional clauses that are inserted in the policy to modify its benefits. Hence you should take special interest in reading this section as they may hold the keys to alter your policy benefits under special circumstances.

The reason to understand the policy document is self-explanatory. Thankfully, the insurers are now using simple language to explain the policy benefits. Hence, self-assign yourself to read the entire policy document today to save yourself from ending up with a ‘denied claim from’ in hand. You should also consult your insurance agent as and when you stumble upon a ‘print’ that is ambiguous.