Read your Insurance Policy!

An insurance policy can be hard to read, but it is important for one to know and understand what is in their policy. Unfortunately, insurance companies occasionally receive complaints at claim stage, arising out of the claim being either not fully covered, or not covered whatsoever. This results in clients wrongly assuming that their insurance provider is trying to avoid honouring their claim, for no good reason.

The policy document (sometimes referred to as the policy wording, or the terms of the policy) together with the policy schedule (which is specific to the risk) provide a clear and precise definition of what circumstances are or are not covered by that policy.

Without delving into too much boring detail, an insurance policy typically contains multiple sections, including a Preamble – a promise by the insurance company to indemnify the insured person for any claims, subject to the policy terms, conditions, provisions and exclusions; which is followed by the Definitions – defining key terms used throughout the policy document. A typical policy would also include a section explaining how the payment of premiums should be made, followed by a section to explain what is covered by the policy. Following this section, one would find a list of Exclusions – which, simply put, are circumstances for which the insurance provider would not be in a position to honour a claim; and also a section to set out any other special conditions of that particular policy. One may also find sections to include instructions on cancelling the policy, Excesses to be applied to the policy, and also the company’s complaints procedure.

After reading and understanding the policy, it is imperative that one also reads through their Schedule – which is an explanation of the person/s and/or property to be insured under that particular policy. For instance, a Home insurance policy schedule would typically include the risk address and the sum insured under each section of the policy; whilst a Health or Travel insurance policy schedule would include the persons to be covered and also the level of cover chosen, which will correspond to a particular table of benefits (the maximum benefits payable under the policy). A schedule may also include an ‘Endorsement’, which states particular conditions relevant to the contract, which may not necessarily be included in the policy document.

If there is any doubt or grey area, one should always contact their insurance provider for a full explanation of their insurance policy, to avoid disappointment at claim stage.