How to Read an Insurance Policy (2024)

Whether you have purchased home, auto, or another type of insurance, it's helpful to read through your official general policy documents as soon as you receive them so you know the terms and conditions of your coverage. The overview section of your declarations page should be your first destination as it gives you the highlights of your policy and its coverages.

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How to read your insurance coverage

We’ll take you step-by-step on how to read insurance coverages so you can better understand your policy:

  1. Read the overview on your declarations page

    You can find an overview of your policy on the declarations page(s) at the very beginning of your policy packet. Consider this insurance policy section to be your cheat sheet for looking up your policy number, coverage period, coverage types, limits, deductibles, premium, and agent's contact information (if applicable), all in one place. You can also access this information online in your policy documents section.

  2. Learn insurance terminology

    As you're reading your insurance policies, you'll come across terms and phrases you may or may not recognize. Additionally, many everyday words take on legal meaning in the world of insurance. Flip to the definitions section for an auto glossary or property glossary of the bolded or italicized words in the policy. It's helpful to look up definitions as they appear so you can closely review each definition in context.

  3. Train your eagle eye and read the fine print

    Reading insurance policy documents takes time, patience, and focus. It's natural to want to skim over it, but you can gain a better understanding of your policy if you give it your full attention from start to finish. Remember, an insurance policy is a contract between you and your insurer. And, because there are many types of auto insurance and types of home insurance out there, making sure you understand what’s available to you and what you currently have can help you choose coverages as your circ*mstances change throughout life.

  4. Ask yourself questions

    It's one thing to read your policy and another to understand it fully. After you've gone through the entire insurance contract, test your retention by asking yourself the following questions:

    • Do I know where to find my policy number and general policy information?
    • When does my policy expire?
    • Do I have an insuring agreement for each coverage that I purchased?
    • What are my deductibles?
    • What are my coverage limits?
    • What are some of the exclusions to my coverage?
  5. See what’s covered (your insuring agreement)

    While the declarations page gives a useful summary, you probably want to know what your policy covers and your policy limits in more detail. Look to the insuring agreement section for a statement of the coverage provided and be aware that each type of coverage will have its own agreement. If you purchase an auto policy with liability insurance, comprehensive, collision, and other auto coverages, there will be a separate insuring agreement for each coverage.

  6. See what’s not covered (your exclusions)

    Insuring agreements are usually brief, concise, and “pursuant to the terms of the policy.” That last part alludes to the other provisions, which will include exclusions to your coverage. Reading the exclusions will help you follow the rules of your policy. There may be one or several exclusion sections in a policy, as well as exceptions to exclusions. Exclusions could also be scattered throughout the policy as line items. If you see sections containing the words “conditions,” “limitations,” or “provisions,” these will also determine what your policy doesn’t cover.

Pro tip:

You can also give both your coverage and your understanding of it a gut-check by asking yourself, "If X happens, will I be covered?"

Not sure? Ask your insurance company or agent

Each insurance policy is unique, and different types of insurance have different terminology. Home insurance, for example, will list the types of perils covered, whereas life insurance centers on a "death benefit" or "face amount" paid to the beneficiary when the insured dies.

There's a lot to read and learn. Take your time, jot down any questions, and contact the agent listed on your declarations page to ask away. You can also email your agent if you’re reviewing your policy documents online. Remember, any time you make changes or renew your insurance, you should receive and review updated documents. Policy documents can contain errors, too, so don't hesitate to bring items to your insurer or agent's attention.

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How to Read an Insurance Policy (2024)


How do you read an insurance policy statement? ›

Review the complete document, double-checking any data about the insured, policyholder, and beneficiaries. Then pay special attention to things such as the policy owner's rights, the premiums section, and any exclusions that the insurer may have.

How do you read an insurance document? ›

This should include:
  1. the name or type of the coverage provided under the policy.
  2. the name of your organization, and an indication that it is the “Named Insured,” or the subject of the coverage.
  3. the duration of the policy.
  4. the names or numbers of endorsem*nts that are included in the policy.

How do you read policy limits? ›

Auto Liability Coverage limits can be written out in three numbers, such as 100/300/50. This means you have a $100,000 limit per person for bodily injury in an accident, a $300,000 total limit per accident for bodily injury, and a $50,000 limit per accident for Property Damage.

How do you Analyse insurance policies? ›

Compare several plans to identify the one that offers the most coverage for the amount of premium you pay. Before you consider the plan's pricing, evaluate the plan's benefits. Examine your premium-paying term based on your expected income for the coming years.

How do you answer insurance questions? ›

Don't offer an ambiguous reply such as "maybe" or "I guess so" – simply refuse to answer. Similarly, if you don't know the answer to a question, state firmly, "I don't know." Avoid discussing your injuries or your medical prognosis. Both are ongoing and subject to change as time passes.

What do policy numbers mean? ›

The policy number on your insurance card is a unique code associated with your insurance plan. Your insurance company uses your policy number to track and process insurance claims and costs. Policy numbers may also be referred to as subscriber IDs or member ID numbers.

Do insurance companies read progress notes? ›

The answer is Yes and No…. Your insurance will most likely never see your therapy progress notes, but they could ask for them. They will most likely never ask to see your diagnostic assessment (The more extensive notes from your intake session), but they might ask for them.

How to read a car insurance paper? ›

How to Read Your Declarations Page
  1. Named Insured on the Policy. At the top of the page, you will see the name and address of at least one named insured. ...
  2. Additional Insured. ...
  3. Drivers on the Policy. ...
  4. Vehicles Covered. ...
  5. Policy Period. ...
  6. Coverage. ...
  7. Limits. ...
  8. Deductibles.
Mar 2, 2024

What is the key facts document for insurance? ›

It will cover items such as the total cost of the insurance policy, the length of time the coverage is for, and any potential risks involved. The document should answer any questions on the terms of the insurance product.

How do you interpret the numbers 100 300 on your insurance policy? ›

The 100 refers to the $100,000 payable limit per injured victim in an accident, and the 300 stands for $300,000 for total bodily injury coverage per accident. The second 100 represents $100,000 property damage coverage per accident.

What does 50 100 50 mean? ›

For example, here is how 50/100/50 limits break down: 50 Bodily Injury Coverage-$50,000 per person for injuries. 100 Overall Maximum Coverage-$100,000 will be paid out for injuries total per accident. 50 Property Damage Coverage-$50,000 per accident will be paid for the damage you do to the property of others.

How do you calculate policy amount? ›

You should keep the following things in mind as you go about the calculations:
  1. Your current annual income.
  2. Your current and future financial liabilities.
  3. Your financial goals.
  4. Your age at the time of policy purchase & number of working years left.
  5. Number of dependent family members & their expenses.

How do you explain insurance for dummies? ›

Insurance is a contract, represented by a policy, in which a policyholder receives financial protection or reimbursem*nt against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured.

What are the 7 basic principles of insurance? ›

There are seven basic principles applicable to insurance contracts relevant to personal injury and car accident cases:
  • Utmost Good Faith.
  • Insurable Interest.
  • Proximate Cause.
  • Indemnity.
  • Subrogation.
  • Contribution.
  • Loss Minimization.

What is insurance interpretation? ›

A contract executed in a standard form of one party must be interpreted in case of doubt in favor of the other party. Rule of strict construction requires that an ambiguous policy provision be construed against the insurer who issued the policy and in favor of coverage to the insured.

What information is listed on an insurance policy? ›

The Declaration Page. This page is usually the first part of an insurance policy. It identifies who is the insured, what risks or property are covered, the policy limits, and the policy period (i.e. time the policy is in force).

What are the four main parts of an insurance policy? ›

What Are the Parts of an Insurance Policy?
  • A financial advisor can help you compare different types of insurance coverage for your needs.
  • Declaration page. The declaration page is usually the first page of an insurance policy. ...
  • Insuring agreement. ...
  • Exclusions, limitations and conditions. ...
  • Riders. ...
  • Definitions.
Jun 22, 2022

What are the contents of the insurance policy document? ›

Description: Insurance policy document is a reference document that contains all information regarding cover, insured, insurance company, premium paid, risk covered, and sum assured. The document is issued by the insurance company to outline their terms on which the document is issued.


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