Insurance policies are a contract between you and the insurer, and are not written so the average person could pick one up, read it from front to back, and come away with a meaningful understanding of what they just read. The structure of a policy is usually very confusing, and they are loaded with special definitions. Fortunately, most insurance contracts share a similar structure. Once you understand how it is structured, you are in a much better position to understand what is and what is not covered under the contract. Insurance policies contain the following general sections, but are not always set-up in the same order.

Declaration Page - A declaration page includes the name and address of who is insured, the issuing carrier, what risks or property are covered, the policy limits, the coverage effective dates and policy numbers. Depending on the policy type, the premium, deductible and a list of applicable endorsements may also appear.

You want to look this over carefully to make sure it lists what you want it to list. Are all of the coverage’s you discussed with your insurance agent included? Are the limits of liability or deductibles correct? If not, make sure you meet with your agent and make the corrections immediately. You don’t want to wait until you file a claim to find out you are not covered.

Definitions - Many of the key terms will be defined in this section. You won’t be able to understand the coverage without a basic understanding of the defined policy terms. The definitions section normally appears in the general conditions section, and is usually printed in bold type. It is a good idea to either pull it out of the policy or make a copy of it, so you can keep referring to it as you read the rest of the policy. Many people make the mistake of assuming that the words in the policy have a meaning broader than what is defined in the policy. The insurance company includes these definitions in the contract for a very good reason as it protects against claims and court cases. Companies go to great lengths to define their terms as clearly as possible.

Coverages - Your insurance policy will discuss each coverage separately. For each type of coverage, the policy will usually define the meaning of the limits listed on your declaration page. Read these very carefully, because sometimes there are lower limits for certain defined types of loss. In addition to the definition of the limits, each coverage type will have an insuring agreement and a list of exclusions.

Insuring Agreement - This is the meat of the policy. In this section the policy will define all of the coverage you have just purchased. Make sure you have your definitions handy when you are reading this section; it will be full of defined terms. Sometimes the coverage section will contain its own definitions or re-definitions of some of the terms. This portion of the agreement generally uses broad language to describe the coverage offered. Read this part very carefully and make sure you understand it before moving on to the exclusions section.

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