Tips for Understanding Your Commercial, Home or Auto Insurance Policy

Couple reviewing policyBow Valley Insurance has been an leading independent insurance broker for 35 years. Through working with our brokers you benefit from the ability to choose from policies provided by nationally recognized insurance companies.

What to Know About Your Policy

Insurance policies can vary vastly, no matter what it is you are seeking coverage for. There may be different coverages, different premium amounts, different terms and conditions, and different exclusions for each and every one. That said, there is one thing about every insurance policy that is the same—they are all contracts between you and the company offering them.

Insurance is a heavily regulated industry, which abides by both federal and provincial legislation. So even though each policy is different – be, auto, home, or another kind – they are all somewhat organized in the same way with reasonably understandable terms and conditions.

The Four Sections of Your Insurance Policies

There are four fundamental sections to a standard insurance contract: The Declarations, The Agreement, The Terms and Conditions, and the Exclusions and Limitations. The names may vary, and your policy might have a separate section for riders or endorsements, or a schedule of personal property, but the broad outlines will all be pretty similar contract to contract.

The first thing you should do, no matter the policy, is study it for errors or omissions in information that you provided. Make certain that your name is spelled correctly, what is to be insured is clearly stated, the use of the property or vehicle, operations in a commercial policy are clearly described etc.  Some factual errors are harmless while others could complicate matters in case of a loss.

The first section usually encountered is the declarations page. This is merely a summary of what follows in the complete contract. The subject of who or what is insured should be there. The policy period detailing how long the risk is insured, typically most of them are foe annual terms.

The coverage limits and deductible will be listed. Limits are the maximum payout the insurer will bear and the deductible is  the sum you are responsible to pay in case of a claim.

The policy premium will detail what you are to pay in each installment and for how long under the contract. For deeper details you’ll have to read the entire formal contract.

The agreement, terms and conditions, and exclusions are usually preceded by a subsection containing definitions. It is best to get a grasp of the definitions before proceeding so you won’t have to refer back so often.

The agreement section is fairly straightforward. You will either have before you a “named perils” policy or an “all risks” one.

The terms and conditions detail your premium payments and your duties to the insurer that must be satisfied to make a successful claim.

No matter what the coverage says about risks, certain ones will be excluded in a separate section. Typical exclusions are earthquakes, floods, war, riot etc.  and deliberate criminal behaviour, depending on the type of coverage.

Endorsements and Riders

Typical endorsements include such things as adding in earthquake coverage on a house or adding a youthful driver to an auto insurance policies. Riders are typically increases in coverage for certain categories, say fine jewellery or valuable artworks, that demand more protection than the standard agreement provides. Always remember to keep an up-to-date home inventory.