How to Read an Insurance Policy

Overview

When did you last read as a refresher the whole commercial general liability policy, commercial property policy, or any insurance policy? Practicing insurance seldom. Generally, a particular response is a sought or researched issue requiring analysis of only individual parts of the form and its relevant endorsements to establish a reply or opinion.

Insurance practitioners know that answering a coverage question or giving an idea without evaluating the policy (and related endorsements) is quicksand errors and omissions. But once the full policy is in hand, such "rules" can be added when reading the form to make finding the necessary response easier and faster. These are not shortcuts for reading the policy, only pointers to make finding the right answer easier. Ascertain who counts as an insured. If the person or individual who suffers or causes loss, injury, or harm is not guaranteed, there is no need to go further – there is no coverage.

Four levels of insurers

There are four levels of insurers:

1. designated (first and all listed),
2. extended insured,
3. automatic insured, and
4. additional (endorsed) insured.

Note the policy type by highlighting areas changed by endorsement and listing which endorsement changes the portion. Reading the section explicitly add the endorsement wording. Compare the forms and endorsements listed on the declarations page with the attached forms and endorsements to ensure the full policy is accessible. This involves checking match version dates.

Reading insurance policies

First, read the insurance policy to ensure the loss or event is contemplated. This is the most comprehensive coverage ever to be, so start here. Read the exclusions after the insurance agreement. Unless omitted, coverage is created in most liability and particular form property policies. The treatment called hazardous property policies and "family and advertisement injuries" portion of the Commercial General Liability Policy differently, read the list of protected hazards (which causes a loss) first, then the exclusions. Read the exclusions exceptions. Exceptions offer coverage in particular quantities.

Offering coverage by exception is better for the carrier than deleting coverage using a long list of exclusions. When referring to another section, read the section immediately. Pay attention to the mentioned conjunctions. "And" includes "or" solely. If there is a set of five qualifiers, using "and" means meeting all five. "Or" means coverage is provided or excluded (or whatever the list provides) if any of the five apply. Consider critical terms and phrases.

Pay attention to the langauge used

There are some keywords to stress when reading the policy. These terms and phrases establish, exclude, or modify coverage and limitations (this may not be an all-inclusive list): "Not" as in "does not apply to ..." or "does not include ..." This changes or limitations any previous grant or denial of coverage. 'Greater than...,' 'less than...,' 'Greater of...,' 'less than...,' 'much...,' 'everything...' or some other quantifying word. "The insured earns the 'lesser of'..." is a quantifying expression whereby the insured earns the least or the lowest sum of the upcoming prices. "Unless ...," "except ...," "only if ..." or "subject to ..." each connotes a condition shift, added necessity, or alternative. "However," discounts before it. This term establishes coverage or condition parameters.

"Includes," as the name implies, is a concept that expands the clause it refers to. "Must" and "regardless" There is no alternative, and circumstances surrounding the necessity are meaningless. "Second" is a sequence word. Any legislation regulations list incidents or acts. Particular consideration must be paid to the sequence of events prescribed by these words. Learn and recognize the meanings of particular words.

The insurance company wishes to regulate the interpretation of these words and phrases by identifying them in the contract. Such meanings can restrict or clarify security breadth. Undefined words offer an ordinary, everyday sense. Understand and ensure that all policy requirements are met. Failure to satisfy the policy requirements will lead to denial of coverage. Confirm the coverage limits for the loss. Pay attention to the mentioned conjunctions.

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