Each insurance policy has the following elements:
- Application – often incorporated into the policy as part of the contract.
- Declaration (dec sheet) – lists the policyholder’s limits, deductibles and other important coverage information.
- Definitions – provides specific meanings of many terms used in the policy.
- Coverage – the body of the policy which usually includes a short paragraph called the “insuring agreement” and sets forth what the policy covers.
- Exclusions- the ifs, ands or buts of the policy.
- Limits – the maximum amount of money the insurance company must pay on a covered claim.
- Deductibles – the amount you must pay on a claim before the policy benefits begin.
- Endorsements- modifications to the policy which can limit, expand or alter what is otherwise covered or excluded.
As frustrating as it may be, read the policy carefully BEFORE buying it. You may not understand everything in the policy, but you are required (to try) to read it. If you do not, you may lose important legal rights.