How to understand your insurance policy document

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 policy document?

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 agreed compensation.

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
  • riders/endorsements
  • Warranties, etc.

Now, let’s look at each part one after the other:

Insurance Policy Schedule or Declaration Page

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 Endorsements

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 parts.

Hopefully, you feel more confident about reading an insurance policy document.

What challenges have you been having with insurance policies?

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