The Importance of Reading Insurance Policy Documents
Traditionally, the natural tendency of people is to avoid insurance policies as much as they can. The reason for this is that insurance policies, while being extremely necessary, are viewed as very complicated.
However, as any seasoned insurance professional would tell you, it is very important for an insurance policy holder to go through his policy documents. Reading policy documents would allow you to understand your insurance policy better through a wide variety of ways. Consider the following:
1. Definitions: One of the reasons why people find it difficult to understand insurance policies is that they contain technical language that is not commonly understood.
However, if you read the policy documents of your insurance policies, you would learn the meanings of all the technical jargon owing to the ‘definitions’ section. This would further allow you to understand not only your policy but also the insurance industry in general.
2. Cover: While most insurance policy holders have a vague idea of what situations their policy protects them from, very few would be able to list all cover aspects freely. The reason for this is simply that they have not read their policy documents thoroughly.
Not knowing what instances you are covered for can result in a major oversight or mistake leading to your claims process being rejected. In essence, this means that it is extremely important for you to read your policy documents if you are to understand what kind of protection you have.
3. Inclusions & Exclusions: Each insurance policy comes with its own unique set of inclusions and exclusions. Inclusions and exclusions are nothing but a description of special situations where the policy is applicable and where it is not.
While the Inclusions cater to the scope of the coverage of the policy the exclusions mainly deal with the limitations of the policy. When you read your insurance policy documents, you would be arming yourself with knowledge about the strengths and limits of your policy.
4. Special cases: As you no doubt already know and as was mentioned above, insurance policies are extremely complicated contracts. Just like there are inclusions and exclusions in the policy scope, there are special cases as well.
These special cases primarily have to do with the extent of protection the policy provides in special situations. For instance, while your policy may protect you from a particular type of damage, it would, at the same time, put a cap on the total amount of money that you can claim for.
Your insurance policy can deal with these special cases in a wide variety of ways. Two common ways is to put a monetary cap on the claimable amount and to only allow a percentage of the total damage to be claimed.
5. Conditions: As is the case with all legally binding contracts, an insurance policy also puts responsibilities on the two parties i.e. the insured and the insurer.
By reading your insurance policy documents you would be learning about what responsibilities you have and what your insurer’s responsibilities are. In this way you can prevent yourself from rendering your claiming rights void and also hold the insurer to his responsibilities.
Your insurance policy documents are extremely important as they define what your policy, its scope, and its limitations are. Make sure you read them to know your insurance rights inside out.