Know Your Policy

Know how to read your insurance policy

• What’s a declaration?

  The declaration is the first part of your policy and its purpose is to outline basic information about the policy. A declaration includes information about:

  • Type of document (i.e., renewal) and policy number

  • Who’s insured (i.e., individual or business) and mailing address

  • The policy period – the effective dates of coverage

  • Policy limits including

    • the amount of liability insurance purchased

    • any deductibles – the amount you are responsible for paying in the event of a claim

  • The total policy premium – the amount you pay, calculated based on the probability that you may suffer a claimable loss

  • Others who have an interest in the policy, such as a mortgage holder and lender

  • A list of form numbers – coverages and endorsements that add to or alter the policy. Understand these, as some of these coverages are optional and you must request they be added to your policy.

  • The insurance company’s name and mailing address

  • An emergency phone number for reporting a serious loss after regular business hours

• What’s an endorsement?

  An endorsement is added to your policy – also known as an insurance rider – that either changes or adds to existing coverage. An endorsement may increase, limit or restrict the scope of coverage. It may also clarify a unique loss exposure, or add insured parties or locations.

• What’s an insuring agreement?

  In the simplest terms, it’s the promise your insurer makes. An insuring agreement includes information about:

  • What specific losses are covered

  • The type of insurance and a description of what’s covered

  • The specific risks, also known as perils, insured against – circumstances under which the insured may receive compensation after a loss

  • Exclusions that eliminate specific uninsured hazards.

  For a claim to be valid, it must be covered under the policy – the insuring agreement – and not stated as an exclusion.

  Note: Exclusions specify what’s not covered by the policy.

• What are policy conditions?

  To maintain coverage, the insured individual or business must fulfill specific requirements – these are known as the policy or statutory conditions.

  If an insured individual or business breaks, or fails to observe, a policy condition:

  • the policy may be void, which means it’s not valid or legally binding

  • the policy may be voidable, which means the insurance company may choose to cancel it, or

  • the insurer may refuse a claim related to the broken or failed condition

  • This typically occurs when the risk is materially misrepresented or crucial information about the risk is withheld when a policy is purchased.

• What are exclusions and special limits?

  It’s important to understand the exclusions and limits in your policy to avoid potential disappointment after a loss.

  • An exclusion specifies a loss or type of property that isn’t covered by your insurance policy.

  • Certain perils – events or circumstances that result in property damage – may be excluded from your coverage.

  • Your policy covers insured property only up to a specific amount, which is known as a Special Limit. Items such as cash, jewellery, furs, watercraft, fine art and antiques are typically subject to a dollar limit. If you need a higher limit, your insurance representative can offer endorsements that cover these.