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How To Read an Insurance Policy

insurance broker explaining insurance policy to couple

An insurance policy is no easy read. It’s full of jargon and legal terms, so it’s no surprise that most policyholders don’t fully understand their contracts with their insurance companies. If you have a policy or are looking to buy one, here’s some helpful information on how to read and better comprehend the contract.


5 Parts of a Typical Insurance Policy

Insurance policies have five essential parts: declarations, insuring agreements, definitions, exclusions and conditions.

  1. Declarations. The declarations page, or the dec page, outlines the risks and lists all purchased coverages. It states the policy limits and deductibles and the premium amount. The dec page also mentions the other parties interested in the policy, such as mortgage holders or financial institutions. It also includes a list of form numbers and endorsements that add or alter the policy.

  2. Insuring agreements. The insuring agreement page explains what the insurance company has agreed to cover in exchange for the premium. It outlines what losses are covered, a description of the property and the situations that qualify for coverage. Valid claims must be covered under the insuring agreement section and not included in the exclusions section.

  3. Definitions. Insurance policies are legal documents and contain words and phrases with special meanings. The definitions page lists these words and phrases and explains their implications.

  4. Exclusions. Insurance policies begin by stating what’s covered and follow with the exclusions section to let you know what’s not covered, which is equally critical to know. This section also contains broadening provisions explaining the coverage in more detail. For example, if you own a boat, your home insurance policy may not cover damages your vessel sustains on the water but may cover any damage incurred while in your garage.

  5. Policy conditions. This section outlines what the policyholder must do to maintain coverage under the contract. The insurance company will set specific requirements you must meet to make a successful claim. The policy may become void if you breach these conditions.

When reviewing your policy, check for errors in spelling and confirm that the names of the insured and additional insured persons are correct. Check to ensure all additional coverage you purchased is included in the agreement. Go over your policy with an experienced insurance broker who knows what to look for and can explain your policy in a language you understand.


Contact an Experienced and Trusted Insurance Broker in Halifax

At Eisenhauer Insurance Inc., we take the complexity out of buying insurance. Whether for your car, home or business, our experienced brokers can help you better understand your policy and ensure you get the best coverage possible. Contact us today to schedule a no-obligation consultation in Halifax.

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