How to Read and Understand Your Insurance Policy
Insurance policy language, although required by many state laws to be “easy to understand,” isn’t always easy to understand. When is the last time you sat down to read your insurance policy from beginning to end? It’s important to remember that an insurance policy is a legal contract between the insurance company (the insurer) and you or the entity being insured (the insured).
The mere thought of reading an insurance policy can make your head hurt. In fact, rarely do any insurance practitioners undertake to read an entire policy. Generally, they are seeking a specific answer or researching a problem, undertakings that require them to review only individual sections and/or its applicable endorsements to determine the required answer or opinion for a client. Whether you’re looking to read an entire policy or are looking for an answer to a specific question, here are some helpful tips to make it less painful:
Ascertain who qualifies as an insured.
If the person or entity suffering or causing the loss, injury or damage is not an insured, there is no need to go any further because there is likely no coverage. Remember, there are four types of insureds: 1) named insured(s); 2) additionally listed (named) insureds; 3) automatic insureds; and 4) additional (endorsed) insureds
The declarations page is usually the first few pages of the policy. It will have information specific to the policy being reviewed, such as: policy effective and cancellation dates; name of insured; the subject of the insurance policy (list of vehicles, buildings, description of property, etc.); premiums charged; policy form numbers and edition dates.
Annotate the policy form by highlighting the areas changed by an endorsement and list which endorsement changes that section. When reading that part, apply the endorsement wording directly.
Confirm all forms and endorsements are attached.
Compare the forms and endorsements listed on the declarations page with the forms and endorsements attached to make sure the entire policy is available. This includes confirming the edition dates match.
Read the Insuring Agreement first to make sure the loss or occurrence at issue is contemplated in the policy.
Exclusions tell you what is not covered by the policy. Most policies start with broad insuring agreements, then whittle away at the coverage with the use of exclusions. Broad exclusions are not necessarily bad. In most liability and special form property policies, coverage is created when not excluded. Treat named peril property policies and the “personal and advertising injury” section of the commercial general liability policy differently, read the list of covered perils (that which causes a loss) first, then the exclusions.
Read the exceptions to the exclusions. Believe it or not, the exceptions sometimes give coverage back in specific amounts.
Pay special attention to the conjunctions used in a list. For example, “And” is usually inclusive and “or” is usually exclusive. If there is a list of five qualifiers, the use of “and” means that all five must be satisfied. “Or” means that if any of the five apply, coverage is granted or excluded depending on the provision being referred to.
The insurance carrier desires to control the meaning of certain words and phrases and does so by specifically defining them in the policy. Such definitions can limit or explain the breadth of protection. Words not defined are given their common, everyday meaning. Reading your policy helps you verify that the policy meets your needs and that you understand your and the insurance company’s responsibilities if a loss occurs. Many insureds purchase a policy without understanding what is covered, the exclusions that take away coverage, and the conditions that must be met in order for coverage to apply when a loss occurs.
Reading and understanding your policy can help you avoid problems and disagreements with your insurance company in the event of a loss. If your Insurance claim was denied, have Hurricane Damage, Wind Damage, Fire Damage or Flood Damage FPJL will aggressively represent you to ensure you get the money you are owed without any further delay by the insurance company. Our team of attorneys have decades of experience providing affordable representation to Individual and Corporate policy holders facing a wide range of denied, delayed or underpaid insurance claim issues.
Contact our law firm today at (305) 300-3000 for a free consultation