Factors of an Insurance Policy
An Insurance Policy is a written, formal agreement between the buyer and the insurance company. It is a sure fire way to make sure both parties are remaining true to the terms that were agreed to. In the Policy there are several different points that are covered. Knowing what is being talked about in an insurance policy can definitely put you at an advantage.
- Declarations – The main portion of any insurance policy is the declarations portion. In this portions it basically states all the things that will be covered and paid for by the insurance company. This is where the coverage information is found.
- Exclusions – With the declarations there are also exclusions listed that the insurance company will not cover. Policies themselves vary as well as what is excluded. There can be certain exclusions where they will only cover for example your vehicle in an accident and no other vehicles.
- Definitions – This portion of the policy can include certain lawful or other commonly misinterpreted terms. The definitions portions is there to help the buyer know exactly what is being stated, for full comprehension purposes.
- Conditions – The Conditions of a policy are the requirements that both parties must meet in order for the agreement to be fulfilled. Here is where the required payment types will be presented. In the Conditions there will be rules and obligations that explain in detail what the responsibilities are of both parties.
- Insuring Agreement – This is where the risks of the policy holder(buyer) will be written in detail. Risks are the statistics and information that can depict your level of exposure. Exposure and risk are closely associated. They simply mean the probability of something happening based on statistical evidence. This portion of the policy talks about the agreement that was made between the insurer and the buyer.
Other Policy Terms:
- Premium – Associated with any policy, there is an agreed amount that the policy holder must pay for insurance coverage. This payment could be yearly, monthly, or daily—all just depends on the insurance broker. The amount you pay is called the premium.
- Deductible – The deductible is the amount that the policy holder must pay out-of-pocket before the insurer pays any coverage amounts. For example: You go to the doctor and your card says there is a 10,000 dollar deductible. This means that you must pay for doctor visits until it costs you a total of 10,000 dollars. Then the insurance policy kicks in and they cover any future doctor visits. (This is an example and depends only on your policy to see what kind of a deductible you will have. The event and occurrence is purely fictional for comprehension purposes.)