Understanding Your Insurance Policy

An insurance policy is a legally binding contract between an insurance company (the insurer) and either a person or business (the insured). Reading your policy helps you to confirm whether or not the policy meets your needs and also to clarify what the responsibilities of you and the insurance company are, especially when a loss occurs. Many individuals who take on a new insurance policy fail to carefully read what they are signing into and inadvertently pass over any exclusions or conditions that may affect them greatly. In this blog post, Gregg S. Marcus, a Long Island Insurance Executive explains what to look for when you are reviewing your insurance policy.

The four basic sections found in almost all insurance contracts are:

  1. Declaration Page
  2. Insuring Agreement
  3. Exclusions
  4. Conditions

The declaration page is the first part of any insurance contract, this section declares who is an insured, what risks or properties are covered, the policy limits, and the amount of time the policy is in effect.

The insuring agreement states the major promises the insurer is offering and also states what is covered. In this part of the contract the insurer is agreeing to meet specific criteria for the individual or business taking on the policy. There are two types of insuring agreements: Named-perils coverage and All-risk coverage. Named-perils coverage specifically names what is covered; if it is not listed it is not covered. All-risk coverage is just the opposite; it clearly states what isn’t covered, if the All-risk policy doesn’t clearly exclude something than the insurance company covers it.

Exclusions take coverage away from the insuring agreement, the three major types of exclusions are: excluded perils or causes or loss, excluded property, and excluded losses. An example of an excluded peril under a homeowner’s insurance policy would be either an earthquake or a flood. Excluded property under a similar insurance policy would be an automobile. And excluded losses under say an auto insurance policy would be something like damage due to age and normal wear and tear.

Conditions are included in an insurance policy in order to place any limitations on the insurers promise to pay. Conditions are put in place so that in the event in which the policy’s requirements are not met the insurer has the ability to deny a claim.

Most policies also consist of a definitions section at the end, which is included to help the insured understand any business or legal terms used throughout the agreement. If you are having trouble understanding your insurance policy in Nassau County or Suffolk County on Long Island in New York, contact Gregg S. Marcus today and he can assist you!

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