As a former insurance defense lawyer, I have read so many insurance policies, I can quote most of the exclusions in my sleep. For most consumers, however, the insurance policy seems overwhelming to read. It is important to always read your insurance policy. However, if you do not have the time or desire to read your entire insurance policy (whether it be homeowners or auto), you should at least make sure to determine the following:
5 Important Rules for Reading an Insurance Policy
- Determine who qualifies as an insured: You want to make sure that the people who you believe are covered are in fact covered.
- Read the exclusions: Sometimes it seems like an insurance policy excludes more than it covers. It is important to know what is excluded from coverage. This way, you can purchase additional coverage if you think you might need it.
- Read all Endorsements: Endorsements are forms added on to a policy which will change or modify coverage. You will sometimes receive Endorsements in the mail when you renew a policy. It is important to know whether an Endorsement affects your coverages.
- Read and understand the definitions of specifically defined terms: Definitions in insurance policies mean everything. The insurance company may be defining a term in a way that has a completely different meaning than you think it does.
- Confirm the coverage limits are adequate for the loss: This is critical. Too many times, I’ve seen clients get in accidents or get sued and not have enough coverage to compensate the injured party. Often, just a small increase in premium would have provided the client with the coverage they needed. If you are not sure how much coverage you need, talk to a qualified attorney or insurance agent.
While the above items are important to read, remember that there is no shortcut to reading any legal document.