An insurance policy comes in whenever you purchase any kind of insurance. This cuts across individuals that buy insurance coverage for personal use and businesses that need coverage for their companies or employees.
More so, insurance policy carries different clauses but that solely depends on individual choices and type of insurance coverage.
Your insurance policy makes sure that you and your insurance provider are in tune and understands how you want to be served.
Therefore, before you make any insurance purchase, be sure that you understand what an insurance policy does. This article gives you a gentle guide to what you must know about insurance policies.
What is an insurance policy?
A legal contract that binds an insurance provider and the policyholder is an insurance policy. It is a written and signed document that carries what your provider agrees to offer you for your premium.
More so, this legal contract proves that you are in agreement with everything your insurance company or provider says.
But before you sign the dotted lines of your insurance policy, be sure that all the clauses are in your favor. So, it is not just enough to purchase a policy, you need to read to understand and be in tune with your insurance company.
Inasmuch as insurance policies are tailored to your goals by your insurance company. Yet, these insurance companies still look out for themselves in some ways. Therefore, it is important that you look out for yourself too before putting down your signature on your insurance contract.
What is included in your insurance policy?
Your insurance policy is made up of details important to you and must have parts or sections. Again, every detail included in this contract must be thorough.
However, most terms written on these contracts might sound foreign or difficult to understand. This is the reason why you should employ the services of a professional to guide you through it.
Moving forward, your policy may generally contain:
Details of what goes under coverage
Different insurance companies cover different things for their policyholders. Take, for example, you can buy homeowner insurance and be looking forward to getting coverage for natural disasters like floods or earthquakes.
Instead, your provider will not have that policy in place for homeowners insurance coverage but will include fire disasters.
This is where you decide if you will continue or get extra coverage for your home, should you experience earthquakes or floods.
The amount of your deductibles
Insurance coverage like health insurance demands you pay a certain amount as deductibles before your insurance company steps in to take over.
So, you have to check out the amount your insurance provider requires you to pay as deductible and how long you will pay for the deductibles.
Insurance terms
Terms represent all you need to know about the rules guiding your coverage.
Insurance policy number
Every insurance company allocates a number to its policyholders. It helps the policyholders to access their insurance faster instead of going all over the details from the beginning. So, once you sign your coverage contract, you will receive your insurance policy number.
Premium amount
Everything that goes inside coverage adds up to the amount of premium you have to pay to maintain your insurance. Now, it is up to you and your insurance provider to determine the amount of premium that you need to pay for all that is inside the coverage.
Duration of coverage
Most insurance coverage comes with a duration. For instance, some life insurance coverage has a time limit life term life insurance that has a duration of ten to thirty years.
Also, permanent life insurance does not have any limitations placed on it. Therefore, if your coverage is the type that comes with a time frame, you will find it written in your insurance policy.
What insurance does not cover
Insurance policies carry what they do not cover in your insurance package. Apparently, this is a way to remind policyholders of what they should not expect in their coverage package.
Parts of an insurance policy
There are parts or sections to every insurance policy. For clarification, your insurance policy, irrespective of what type of insurance you bought, must have different parts to it. In contrast, some may bear the sixth part but most policies end in the fifth part or section.
Declarations
This part of the document carries the policyholder’s personal details and address. You can also find this part of the document on the first page of your insurance policy.
Furthermore, the declaration page bears the summary of the insurance details and the date it was issued. For coverages that have a duration to it, be sure to find the date here.
Definitions
The definition page of the policy explains insurance words in simpler terms. This page generally, helps the client to understand the message the company is trying to pass across.
However, these terms may still be difficult to comprehend. At this point, you may seek the help of a professional to help you understand thoroughly. More so, you may decide to call the attention of the agent or company to put you through.
Insuring agreement
The agreement section carries what the insurance provider company has agreed to cover when you pay your premiums. Besides, some insurance companies break down this section into smaller parts.
Also, your coverage can determine how many parts this section will be broken into. For example, your car insurance policy agreement section can break down this part into extra pages and identify them by numbers or alphabet.
Like, as coverage 1: Car insurance coverage, Coverage 2: Accident and liability coverage.
Conditions
Changes can occur and that will require your insurance provider to cover what was not agreed upon. In such cases, your insurance company will give conditions for an extra service or coverage. Again, this can apply to the time frame limit and the conditions that you must fulfill if you need an extension.
So, this section protects the insurance company and it is up to the policyholder to keep to these conditions if they need something outside what the provider covered. Furthermore, this section sets the rules you must abide by, for your coverage to keep running smoothly.
Exclusions
This section clarifies what the insurance package removes in case of some events. These companies have laid down rules that guide them. The reason why they make provision for this section is for the policyholder to clearly know where they always set the boundaries.
Endorsements
Endorsement is the extra that is attached to the policy. This part always proves difficult to read and understand. However, if you must read this part or rewrite it, let a professional, preferably a lawyer be present to explain things.
Insurance policies that are must-have
Your peace of mind is a very vital part of a successful life. Peace of mind comes in so many ways but one major contributor is knowing that your valuables are insured.
Moving forward, there are insurance policies that are must-haves for you to enjoy some peace of mind even in a chaotic world. Most of them include:
Life insurance policy
Purchasing a life insurance policy gives you the right to enjoy your life. Sure, there are different types of life insurance coverage but those that offer benefits to your loved ones after you pass away give a more settling effect.
Car insurance policy
The joy of buying a car is not complete until you get it covered. Car insurance takes care of the cost of your car issues, including accidents, repairs, and medical bills.
Health insurance policy
Even while you enjoy good health, health insurance cushions the shock of a medical diagnosis and the outrageous medical bills attached.
Your insurance company covers most of your hospital visitations, hospital stays and even prescription drugs.
Homeowners insurance policy
Buying coverage for your cozy home allows you to sleep with both eyes closed. In case of any unforeseen disaster like a fire, your insurance pays to erect a new home or reconstruct your home without you spending from your pocket.
Renters insurance policy
If you have properties that you rent out to people, you need this insurance to protect your property. Therefore, any damage that comes to your property, your renters insurance will take care of it.
