My Insurance Policy

My Insurance Policy - What is a Policy?

The title of this post, “What is a Policy?” is not meant to be condescending in any way, shape, or form. But the intent of this site is to make insurance a less complicated matter, keeping terms, definitions, and principles understandable by the common consumer.

In our first post, “What is Insurance?” we gave a simple and brief explanation of this financial service product. With that, we also laid out some common terms that might be used by an insurance agent when discussing it with you. The first of those terms was: Policy - legal agreement or contract between 2 or more parties usually pertaining to insurance.

Wikipedia notes that an insurance policy, also referred to as an insurance contract, is the legal documentation and design under which the features of the policy (coverages, exclusions, premium, etc.) are enforced.

There are five primary parts of an insurance policy or contract. You might want to review the basic term definitions used in the ”What is Insurance?” post for reference.

1. Definitions - define important terms used in the policy
2. Insuring Agreement - describes the covered risks or nature of coverage, summarizes the major promises of the insurance company, as well as stating what is covered.
3. Declarations - identifies who is covered under the policy, the insured’s address, the insuring company, what risks or property are covered, the policy limits (amount of insurance), any applicable deductibles (out of pocket portion of a claim), the policy period and premium amount.
4. Exclusions - describes what property, risks, or losses which are not covered by the policy.
5. Conditions - provisions, rules of conduct, duties and obligations required for coverage. If policy conditions are not met, the insuring company can deny paying out the claim.

We’ll continue more about policies during our next post - describing the nature of insurance policies and how various portions of the policy apply to either you or the insurance company.

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