Yes! Even though you may not understand everything in your policy, you have the responsibility to read it. If you do not do so, you may lose important legal rights. Use the information provided by Insurance Consumers to decipher the details of your policy, and prepare a list of questions for items that you do not understand. Present these questions to your agent, and document the answers you are given.
What is included in a policy?
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.
What can happen when the application answers are not complete and correct?
After you have completed the application you will be asked to sign it. Usually, right above your signature, there is provision stating that everything you have written on the application is true and correct. Do not sign it unless everything is true and correct.
You cannot afford to be casual about signing the application. If the insurance company learns that your answers are incomplete or inaccurate, the insurance company may have a right to deny payment or rescind (cancel) your coverage.
What is the significance of an insurance application?
Insurance applications are very important. You can be held strictly accountable for the information included in the insurance application. You will be asked numerous questions by the company agent. These questions must be answered fully, literally and honestly.
Insurance agents should not change the wording of, or paraphrase, application questions. You are the one who is responsible for what is written on the application. Make sure that your responses are absolutely correct and complete.
How should you prepare before meeting with an insurance agent?
Thoughtfully. It is of great importance to prepare carefully before meeting with any insurance representative.
Ask yourself exactly what your objectives are:
- Who are the individuals you are seeking to insure?
- What, precisely, are you attempting to protect?
- For what types of occurrences or events are you trying to obtain this protection?
- What are the dollar policy limits that are necessary to get the protection you are seeking?
- What are your expectations with regard to what is included and what is excluded in your coverage?
- Are you willing to pay higher deductibles on a particular portion of your coverage in order to reduce the cost of your insurance?
- What kind of information should you obtain on the companies you are considering?
- How can you go about gathering this information?
There are many questions you will think of if you simply think through the process before walking into a meeting with an insurance company representative. If you want your insurance to provide real security, it is very important that you prepare a list of goals and questions. Review the Insurance Consumers Types of Insurance relevant to the insurance you are seeking before preparing your lists.