An insurance policy is nothing but a legal contract between the insurance company or insurer and the insured or the policyholder. The contract is often filled with plenty of words, jargon that is typical of the insurance industry, long sentences and so on. The entire thing might look complex and daunting but it is still important to read through the entire document and understand the policy in and out.
The knowledge is critical and would help you make the most of your insurance. It would also help you know what is the benefit you are enjoying and what are the stipulations attached to it. To make things simpler and help you understand the nitty-gritty of your insurance policy; we take a closer look at each section of the insurance policy and understand its implications and meanings.
- Insurance Declaration Page
Also referred to as the ‘dec(k) page’; it is often the first page of the policy. This section of the policy is like its prologue that provides a high-level view of the policy and its viability. It states the period of coverage provided, the insured as well as the description of what is covered and the coverage limits.
In an auto policy, it will include the model, make and VIN of the insured car, car owner’s name, deductible and the premium amount.
- Definitions
Your policy may or may not have this page but if most often present. Here, you find the description and definition of typical insurance jargon that you are likely to come across in the policy. It is important to read this section as it helps you to clearly understand what terms like ‘deductible’’ ‘co-pay’, etc. mean. Despite this; if you still across some terms that you cannot understand; you can easily look up in the Nationwide’s insurance glossary and seek clarification.
- Insuring Agreement
Now we come to the insuring agreement page. Here, the promises and obligations of the insurance company are stated in detail. It states facts like the amount that they would pay in case of hospitalization, the diseases covered, the expenses that they would bear, its limit, etc.
Here, you mostly find two types of insuring agreements. The first type is ‘perils coverage.’ This agreement explicitly states what is covered under the contract. This format is usually followed in health policy.
The second type is the all-risk coverage. It states the losses that would be covered by the insurance company. This format is mostly followed in life insurance policies.
- The Exclusions Section
This part must always be given special attention. It specifically spells out those things and scenarios that will not be covered by the policy. The exclusions are broadly classified into three different types.
- Excluded perils – These are those causes of loss that will not be covered by the policy. For instance, if the cause of loss of property is flood; it may not be covered by the policy. Causes are natural disasters like earthquakes, critical illnesses like cancer, etc. are excluded from the policy. They often tend to be covered under add-ons and the special cover.
- Excluded losses- These are specific losses that are not covered by the policy. For instance, wear and tear on a car, OPD care are generally losses that are not covered by the policy.
- Excluded property- These are items of your property that will not be covered by your policy. Often, aircraft, boats, etc. are items that are not covered by any base policy.
- Conditions Sections
It is again a very important section that needs your due attention. It is quite close to exclusions but with a difference. This section talks about clauses that must be met for the insurance company to approve your claim. It also states conditions and circumstances under which they would not approve your claim. You must read this section carefully and always ensure that the conditions are met so that you do not face any claim rejection.
- Endorsements and Riders Section
These refer to the additional and optional coverage that you procure for yourself with an extra premium. It makes your insurance plan more equipped to meet your needs. For instance, you may take an extra cover of critical illness with your health plan to make it more comprehensive.
Final words
Understanding your insurance policy is critical for you to be aware of what you are paying for; what are your safe zones and what are your risk zones. This helps you protect your life from any unforeseen events and lead a happy life.