Understanding the Basics of Insurance Contracts

An insurance contract can also be called an insurance policy. It is a written contract between you (known as the insured) and the insurance company (insurer). Insurance contract contains clauses or agreements pertaining to the level or extent of coverage to be given. All of these clauses or agreements will be met and provided for after payment of a premium. Paying of this premium gives you entitlement to file for a claim if you have a loss or damage. The amount of coverage in an insurance policy is always well spelt out in the contract. Ensure you do well to understand it.

Usually the first page of the insurance contract is where you find the agreement summary. This initial page is known by different names, depending on the type of policy. It is also known as a Declaration page, benefit summary page, etc. This page will contain who is covered, what is covered, the effective dates of coverage, and the amount of the premium. The number of the policy will be listed, along with your name and address and your insurance agent's name and address.

The contract will contain all the clauses and limitations of the policy. Most people either become weary of reading or do not fully understand the policy provision before appending their signature. Do well to go through each agreement or clause. If you do not understand any clause, meet with insurance experts to help breakdown that aspect of the policy. Never assume things!