Insurance Policies 101
Understanding the basic structure of rather esoteric documents such as insurance policies takes a proper dissection. Below, we breakdown and understand the basics of declarations, endorsements, conditions, and exclusions that fall under insurance policies.
Declarations
- Declarations are found on the top page of the policy and states important information including:
- Personal information of the insured (name and address)
- Type of coverage
- Period of policy
- Limits of liability
- Policy premium
Endorsements
- In insurance jargon, endorsements are the terms and provisions added to an insurance policy. These additions are made based on certain needs and requirements of undisclosed transactions or circumstances. Often, endorsements are presented in standard industry form.
- Endorsements are created for specific policies. Because they are particular, express endorsements can often supersede conflicting terms found in the other parts of the policy.
- Endorsements might be made to:
- Extend insurance policies to a larger group of people
- Limit coverage of a policy
Exclusions
- Exclusions are similar to endorsements as they can also limit the scope of insurance coverage. What’s unique to exclusions is that they have to be constructed in favor of coverage.
- All exclusions must be listed out by the time a policy commences.
Conditions
- Conditions establish obligations of the insured and the insurance company. Conditions are created to provide notice to an insurance company in case they are ever served a suit.
- Because notifications are paramount, they have to be taken seriously. The insured are required to give notice of a claim and give notice of a potential claim.
- Notice can be described as “Duties in the event of Occurrence, Claim, or Suit”.
- Insured person’s failure to comply with notice requirements of the policy can negatively affect policy and result in denial of coverage.
Caveats
Insurance can be difficult to navigate and vary from business to business. Make sure you consult a professional in order to understand varying insurance policies.
