I thought I’d take some time to review with everyone some basic terms and details of an insurance policy that will help you understand what it is we’re talking about when we throw our funny words at you. We don’t mean to confuse you. It’s just that we’ve simply been using these fancy words for so long we forget it’s pretty much a foreign language to most people.
I will begin with the actual piece of paper you receive in the mail, the first page of which is called the Declarations Page. Declarations Page is the sophisticated word we use when we are referring to the front page of the policy you are holding in your hands whenever you call us on the phone to ask a question. You may simply call it your Policy, which makes sense, of course. But we’ve been trained over the years to use the technical term, Declarations Page. If you think about it, it’s a pretty accurate description, since it essentially declares basic pieces of information about your policy. For instance, the Declarations Page indicates your name or business name, your mailing address, the date the policy is effective, the date the policy expires, the limits of coverage, the address of the property(s) being insured, the premium you are paying, and any applicable forms attached to the policy. In other words, it’s where you can find the basic policy information if you’re curious.
Let’s take a look at another word we might throw your way, “First Named Insured.” The First Named Insured is the first person or entity listed on the policy. For instance, a husband and wife might have both names on the policy, Ex: John Doe and Jane Doe. The first person named is the First Named Insured. John is named first and, therefore, is the First Named Insured. Got that? This is extremely important because it is the First Named Insured who is responsible for paying the premium and is the one who has the right to make changes to the policy.
In addition to these fancy words, it would be good to know that each policy contains Common Conditions that are pretty much common to almost every insurance policy. I’ll briefly describe some of the most, uh… common.
Agreement – Your insurance company agrees to provide you with the coverage indicated on the Declarations Page as long as you pay the policy premium in a timely manner.
Automatic Renewal – If your policy has an automatic renewal, it means your policy will automatically renew every year, unless you request it to be terminated. (As long as you pay the premium, of course.)
Cancel or Refuse to Renew – The insurance company can cancel or refuse to renew a policy if notice is given to you in writing at least 30 days in advance.
Concealment, Fraud or Misrepresentation – The insurance company can void the entire policy if it is determined that you intentionally concealed or misrepresented any material fact or circumstance concerning the insurance. This basically means you should not provide false information at the time of application. Moreover, an insurance company can deny a claim if the claim itself is fraudulent.
Cooperation – By signing the insurance application you, the insured, agree to cooperate with the insurance company. You cooperate by; 1) cooperating with the claims process, 2) by completing questionnaires truthfully and promptly, 3) by permitting and helping with inspections and audits, and 4) by complying with any specific recommendations to improve your property or risk.
In addition, most policies will detail how to cooperate during the claims process.
Right to Recover – The insurance company, after making a claim payment under the policy, has the right to recover that payment from anyone else held responsible. For instance, if someone else causes your automobile accident, your insurance company can choose to pay the claim and then collect their money from the other person, usually from their insurance.
Inspection and Audit – This is a common condition of many business insurance policies. The insurance company has the right to inspect your property or risk at any time. They can also recommend changes and provide you with reports on the conditions they might find after an inspection. The insurance company also has the right to audit your risk by examining or auditing your books and records. Usually, they must do this within a certain amount of time after the policy is first written.
Your policy will also spell out what is not covered and what is excluded. Exclusions can vary from policy to policy.
In summary, it is a good idea to be familiar with your policy; its terms, definitions, conditions, coverages and exclusions. And, if you call us for additional clarification, we’ll try to keep the fancy words to a minimum.