Insurance Policy
What Does Insurance Policy Mean?
An insurance policy is a formal contract between an insurance company and the insured, in which the insurer agrees to provide specific services or pay a designated amount in the event of a loss covered by the policy. This legal document outlines the exact terms and conditions of the coverage, including details such as covered perils, coverage limits, policy duration, and premium amounts.
Insuranceopedia Explains Insurance Policy
An insurance policy typically consists of four basic sections: the declaration page, the insuring agreement, exclusions, and conditions. The declaration page identifies the insured party, the covered risks or items, policy limits, and the coverage period. The insuring agreement outlines exactly what the insurance company agrees to do, such as paying out valid claims when the insured experiences a covered loss. The exclusions section details what the policy does not cover, such as certain perils or types of property. Lastly, the conditions section outlines provisions that limit or qualify the insurer’s responsibilities. For example, if the insured fails to file a proof of loss, the insurer is not obligated to pay for a covered claim.
Additionally, insurance policies often include a definitions section as well as endorsements and riders. The definitions section clarifies terms used throughout the policy, while endorsements and riders modify the original coverage, either by adding, removing, or adjusting specific provisions.
