The general structure of an insurance contract is as follows:
The declarations section of an insurance contract identifies the parties to the contract and states that the following provisions constitute an insurance contract. will express in general terms the intentions of the parties in relation to the object of the insurance, the duration of the policy, the risks covered by the policy, the payment limits in the event of the occurrence of an insured risk and the financial obligations of the insured ( premiums, deductibles, copays, etc.).
Most insurance contracts contain a defined terms section that provides a common understanding of certain terms or phrases that are used throughout the insurance contract. this section can be very important to avoid ambiguity in the agreement.
This section, often called an insurance contract, sets forth the insurance company’s promises to indemnify the insured against certain risks of loss. in particular, it will describe the type of risks against which it is insured and the person, property or thing covered by the policy. There are two basic forms of an insurance contract:
coverage against specific risks
This form of contract insures the risks specifically listed in the policy. if the hazard is not listed, it is not covered.
all risk coverage
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This settlement form insures all losses suffered by a specific person or property, except those losses specifically excluded. if the loss is not excluded, it is covered.
exclusions are types of contingent risks that are not covered or insured by a policy. There are three main types of exclusions:
excluded perils or causes of loss
For example, homeowners insurance may exclude damage from flooding.
For example, an automobile policy may exclude normal wear and tear from everyday use.
For example, a homeowners policy may not cover certain personal property located within the home.
Conditions are contractual provisions that require a certain event or circumstance to occur before duties or obligations under the contract arise. If the conditions of the policy are not met, the insurer is not required to insure against the loss that is subject to that condition. that is, the insurer will deny a claim for losses if an applicable condition in the policy is not met. for example, the insurer may make submission of a claim and proof of loss a condition of coverage.
are forms attached to the main insurance policy used to modify the duties or obligations of the policy. Endorsements often impose some condition on the insurers’ duty to indemnify the insured or cover a particular type of loss. They may also modify or delete express clauses present in the core of the insurance policy. this is the primary method by which insurers tailor a specific policy to cover a particular insured.
Policy riders are amendments to an existing policy. the rider contains the modified terms and becomes part of the original insurance contract. An insurer will use a rider whenever the terms of coverage under an insured’s policy change.
politics jackets or folders
Insurers often issue a policy within a policy sleeve. the dust jacket is a cover, folder, envelope or folder that contains the policy. the folder will often contain repetitive provisions of the insurance policy. Some insurers now add material to the insurance policy that contains the standard repetitive provisions, rather than including those provisions on the jacket.
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