Insurance is a contract of interest. One party, the insured, seeks to transfer the risk of a loss of his financial interest in a property to another, the insurer. For this arrangement to be in force and binding on both parties, there has to be documented evidence which brings them to a legal relationship. This legal agreement is contained in an insurance policy document.
What is an insurance
An insurance policy
document is a legal agreement between an insured and an insurer. This document
seals the intention of the insured to cede his risk to the insurer for an
What are the parts of
an insurance policy document?
A typical insurance
policy document would comprise the following:
- a schedule or declaration page
- policy terms and conditions
- policy exclusions
- Warranties, etc.
Now, let’s look at each part one after the other:
Insurance Policy Schedule or Declaration
This is the part of the policy document that gives the
details of the owner of the risk, details about the subject matter, the
location of the owner and the item, the duration of the cover, the premium paid
and the value of the risk, etc. It is the part of the document that gives a
glimpse into the kind of policy being contracted.
Insurance Policy Terms and Conditions
This section of the policy document declares the responsibility
of the insurance company to the owner of the risk. It will comprise the scope
of cover, the situations where the insured can get a claim paid and the
responsibility of the insured during the period of insurance.
Insurance Policy Exclusions
This part states expressly the situations or risks that are
not covered by a particular policy. It means you cannot get a claim if anything
stated under this portion of the document occurs.
Insurance Policy Riders and
Riders and endorsements mean the same thing. This part of the document is used to add, subtract or totally alter the terms and conditions of an insurance policy. Riders are used when the insured wants some added coverages or wants to remove some benefits to reducing cost.
Insurance Policy Warranties
An insurance warranty in a policy document is the part that states and emphasizes what your duty of care should be. It shows you what you should do concerning the subject matter of insurance preceding an incidence that can lead to a claim. A warranty will specify those conditions you must continually create for the safety of the risk thereby limiting the possible loss.
From this post, you would have learned about an insurance
policy document, its importance to an insurance transaction and the various
Hopefully, you feel more confident about reading an insurance
What challenges have you been having with insurance