How to read an insurance policy Determine who qualifies as an insured. Confirm that all forms and endorsements are included. Read the insurance contract first. Read the exceptions to the exclusions.
When the policy references another section, read it immediately. It also pays special attention to absolute language (always, never) or inclusive language (and, or). The requirement that a loss be reported to law enforcement and the insurer within 24 hours is not the same as the requirement that the loss be reported to law enforcement or the insurer within 24 hours. An erroneous reading of this provision could result in a loss of coverage.
Because companies are not content to rely on the common and potentially ambiguous meaning of terms used in commercial insurance contracts and risk having courts hand down a judgment based on “contra proferentem”, all commercial insurance policies contain a definition section. In the Insurance Contracts section, the insurer basically tells the reader what the policy covers. Similarly, the statements page of a life insurance policy will include the name of the insured person and the nominal amount of the life insurance policy (for example, in the insurance contract, the insurer agrees to do certain things, such as paying for losses for covered hazards, providing certain services, or agreeing to defend the insured in a civil liability lawsuit). Reading a commercial insurance policy is not an intuitive practice, and most people find insurance policies difficult to understand.
When you learn to read insurance coverage, you'll want to look at every part of your policy. All insurance products are governed by the terms of the applicable insurance policy, and all related decisions (such as coverage approval, premiums, fees and charges) and policy obligations are the sole responsibility of the insurance insurer. Reading your policy helps you verify that the policy meets your needs and that you understand your responsibilities and those of the insurance company in the event of a loss. Bankrate's insurance editorial team includes four licensed agents who are very familiar with auto insurance documents.
The SCDOI would like to remind consumers that reading and understanding their entire policy can help them avoid problems and disagreements with their insurance company in the event of a loss. Ironically, insurance companies strive to make their policies as clear as possible, because when coverage is subject to legal challenge, ambiguity in language is always interpreted in a way that favors the insured, not the insurer. All auto insurance companies have unique rating algorithms depending on the level of risk they're willing to take, meaning that the cost of coverage will vary for each company. The bottom line is that reading a commercial insurance policy without first taking the time to understand the meaning of the defined terms can be a big mistake.
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