The Six Main Parts of an Insurance Policy

Written for Erwin Insurance Agency

Insurance policies might just seem like a giant mess of pages, sections, and appendices, but believe it or not, there is some structure to the “mess.” While all policies are structured differently, there are some standards out there.

Most insurance policies contain six main components. Each one provides specific information that impacts your insurance policy and coverage. Insurance policies aren’t meant to be read like books from start to finish. Instead, they’re like a combination of forms that have to be read together. You’ll need to go back and forth between sections, following footers and notations, to understand how everything works together.

To help you understand your coverage, here are the six main components of an insurance policy.

1. Deck Page

The deck page is the first section in an insurance policy and contains the most personalized info. It’ll have all the important information you need to get a basic overview of your policy:

• Your name
• Coverages
• Date the policy is effective
• Premium
• Summaries
• Schedule of forms
• And a bunch of other stuff that applies to your specific policy

It’s like the cheat sheet to the rest of your policy that takes all the info from the other forms and condenses it into an easy(ish)-to-read page.

2. Insuring Agreement

The insuring agreement follows the deck page and defines how coverage is triggered. It’s essentially a broad statement about the intent of the coverage.

Most insuring statements start with a phrase like, “we agree to pay for X, Y, and Z.” It won’t go into detail about the specific coverages, but this is where the jumping between sections comes in.

The trick to reading an insuring agreement is to pay attention to which terms are capitalized. Any capitalized terms are references to other sections of the policy. So, if you see any capital letters, look through the rest of the policy to see what they’re talking about.

3. Conditions of the Policy

The next component is the conditions of the policy. While the insuring agreement said, “we agree to pay for X, Y, and Z…” the conditions of the policy finish the statement by saying, “… under conditions 1, 2, and 3.” This part explains what both parties (you and the insurance company) are supposed to do pre- and post-loss.

Basically, this is an entire section devoted to what you need to do to keep the policy enforced and how to get a claim covered.

One of the most frequently used policy conditions is the cancelation section, which basically says if you don’t pay your premium, the insurance company can cancel your policy. Simple enough, right? It could also include loss conditions like a timeframe to notify the insurance company about a potential loss if you want to submit a claim. In short, this is a very important section to pay attention to.

4. Exclusions

The exclusions section is exactly like it sounds. It lists everything that’s not covered by the policy. Needless to say, this is another very important section to pay attention to.

This section can create some confusion while reading an insurance policy. For example, your insuring agreement might say something like, “we agree to cover all attached structures for this policy.” Then, when you flip to the exclusions, it might have a clause the excludes garages.

So, what does that mean? It means that even if you have an attached garage—which should be included as an “attached structure”—it’s NOT covered by your insurance policy.

Different policies use the exclusions section differently. For some, they use the idea of “everything is covered unless it’s explicitly excluded.” Other policies will list everything that’s included in the policy, and consider everything else not covered.

To avoid confusion, always a good idea to talk with your insurance agent to make sure you understand exactly what’s covered and what’s not covered by your policy.

5. Definitions

The definitions section is like a built-in dictionary for your policy. If there are any questionable, hard-to-understand, or unclear terms, this is where you’d go to learn exactly what the insurance company meant.

Typically, this isn’t like a “what’s that word” section; it’s designed to clear up any miscommunications or misunderstandings that could lead to issues down the road.

For example, a commercial insurance policy might cover damages caused by “pollutants.” Well, what exactly is a pollutant? Of course, the insurance company probably means hazardous waste materials, but a good lawyer could probably argue that a bad employee is a type of pollutant. So, if a disgruntled employee destroys your office, are the damages covered by your policy? This is where you’d head to the definitions section to find out what exactly counts as a “pollutant.”

6. Endorsements

Endorsements aren’t technically a core component, but they’re included in most insurance policies.

Endorsements change something about the policy, typically how the coverage is applied. They can either add or subtract coverage.

It’s important to pay attention to endorsements because they override the core insurance policy. For example, if your policy explicitly states that garages are covered, but there’s an endorsement that says they’re not, your garage isn’t actually covered.

Your insurance company can add or remove endorsements as needed. For commercial businesses, you might need a specific type of insurance to work with certain clients. Instead of rewriting your entire policy, your insurance provider can just add an endorsement to make sure you’re covered. They’re designed to keep your policy flexible.

Work with an Experienced Insurance Agent

Insurance policies aren’t always easy to read. There’s a lot of back-and-forth between the sections to catch every detail that might affect your policy. To make sure you understand your policy through and through, make sure you work with an experienced agent.

If you need help finding the right policy, trust the experts at Erwin Insurance. We have over 50 years of experience helping home and business owners all over the United States find the perfect coverage to suit their needs. Contact us to get an insurance quote and enjoy the peace of mind that only the right insurance coverage can provide.