Reading An Insurance Policy

Insurance lawyers in Dallas will tell you to “read the policy.” Now the reality is that very few people ever read their insurance policy. Most people rely on their insurance agent to sell them a policy they want. This expectation often makes the agent responsible for selling a person a policy that does not provide the coverage that is expected.
An insurance publication called the Insurance Journal contains lots of good information from the insurance world. Most people involved in the insurance business have ready access to this publication, including insurance company managers, agents, adjustors, and attorneys who do insurance work.
A January 5, article is worth reading. It is authored by Christopher J. Boggs and is titled “How To Read Any Insurance Policy: 12 Rules.” Here is what the article tells us.
Rarely does any insurance practitioner, even hard core ones, undertake to read an entire policy. Generally a specific answer is being sought or a problem is being researched requiring review of only individual parts of the coverage form and/or its applicable endorsements to develop the required answer or opinion.
Whether reading an entire policy or only sections, 12 specific “rules” can be applied in reading the policy form to make finding the needed answer easier and quicker. These are not shortcuts to reading the policy, as there is no shortcut to reading any legal document, just pointers towards correct policy interpretation and application.
12 Rules for Reading an Insurance Policy
1. Ascertain who qualifies as an insured.
2. Annotate the policy form.
3. Confirm all forms and endorsements are attached.
4. Read the Insuring Agreement first.
5. Read the exclusions.
6. Read the exceptions to the exclusions.
7. When the policy refers to another section, read that section immediately.
8. Pay attention to the conjunctions used in a list.
9. Pay attention to key words and phrases.
10. Read and understand the definitions of specifically defined terms.
11. Understand and make sure all the policy conditions have been met.
12. Confirm the coverage limits are adequate for the loss.
Searching the internet, most people would be able to find information explaining each of these rules and detailing several of them. In addition to these rules, there is information to help someone explore why exclusions exist and the various classes of exclusions found in most property/casualty insurance policies.
This information is valuable to all people even if the only insurance someone has is mandated auto liability insurance. Certainly someone who has more interests to be insured and protected needs to have working knowledge of insurance policies.