Rarely does anyone (even those who sell insurance) try to read an entire policy? Most look at individual parts of the coverage, endorsements or the declaration page to seek answers or research a problem. Regardless, you should read and understand certain parts of your insurance coverage(whether it is auto insurance or homeowners) from the start, and it’s a good idea to know how to read the rest of the policy in case you suffer a loss and need to make a claim. Your ability to read and understand your policy helps you to know, work and negotiate with whomever and hopefully avoid the trap of depending on coverage interpretations from others.
To make finding your answer easier and quicker, Insurance Journal provides 12 rules for reading an insurance policy.
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.
And Insure.com goes a little further on educating us on how to read the policy:
1. Carefully read the declarations page: Even if you look at nothing else in your policy, read and understand the declarations page. It summarizes your policy, giving you important information including the names of the insured, the policy’s effective dates, amount of coverage, deductibles and endorsements Make sure all the forms for endorsements are attached to the policy.
2. Figure out who’s insured on your policy: Determining who to list on your insurance policy and who’s included often depends on the policy and the sort of damage you encounter.
3. Read the policy’s insuring agreement: This section describes what your policy covers, so it’s pretty important. For example, car insurance policies have separate agreements for the four components of coverage: liability, medical payments, uninsured and underinsured motorist and damage to your auto (including collision and comprehensive coverage).
4. Read the insurance policy’s exclusions
5. Find the exceptions to the exclusions: If an exclusion applies to your loss, see if the policy lists an exception to that exclusion.
6. Read referenced sections: When the policy refers to another section, read the referenced section right away.
7. Watch out for conjunctions: In particular, look for words such as “and” and “or”.
8. Look for key words and phrases: Pay close attention to key words and phrases that define coverage, such as “does not apply to,” “only if,” “greater than,” “except,” “all,” “the most,” and others such as however.
9. Understand insurance policy definitions: When a word isn’t defined in the policy, the “everyday definition” applies, and if there is more than one reasonable interpretation, courts generally accept the one that favors you as the insured.
10. Make sure you have met all insurance policy conditions.