What is the amount of money that an individual or business must pay for an insurance policy?

An insurance policy is a legal contract between the insurance company (the insurer) and the person(s), business, or entity being insured (the insured). Reading your policy helps you verify that the policy meets your needs and that you understand your and the insurance company’s responsibilities if a loss occurs. Many insureds purchase a policy without understanding what is covered, the exclusions that take away coverage, and the conditions that must be met in order for coverage to apply when a loss occurs. The SCDOI would like to remind consumers that reading and understanding your entire policy can help you avoid problems and disagreements with your insurance company in the event of a loss.

The Basics of an Insurance Contract

There are four basic parts to an insurance contract:

• Declaration Page
• Insuring Agreement
• Exclusions
• Conditions

It is important to understand that multi-peril policies may have specific exclusions and conditions for each type of coverage, such as collision coverage, medical payment coverage, liability coverage, and so on. You will need to make sure that you read the language for the specific coverage that applies to your loss.

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).

For example, the Declarations Page of an automobile policy will include the description of the vehicle covered (e.g. make/model, VIN number), the name of the person covered, the premium amount, and the deductible (the amount you will have to pay for a claim before an insurer pays its portion of a covered claim).

Similarly, the Declarations Page of a life insurance policy will include the name of the person insured and the face amount of the life insurance policy (e.g. $25,000, $50,000, etc.).

The Insuring Agreement

This is a summary of the major promises of the insurance company and states what is covered. In the Insuring Agreement, the insurer agrees to do certain things such as paying losses for covered perils, providing certain services, or agreeing to defend the insured in a liability lawsuit. There are two basic forms of an insuring agreement:

• Named–perils coverage, under which only those perils specifically listed in the policy are covered. If the peril is not listed, it is not covered.
• All–risk coverage, under which all losses are covered except those losses specifically excluded. If the loss is not excluded, then it is covered. Life insurance policies are typically all-risk policies.

The Exclusions

Exclusions take coverage away from the Insuring Agreement. The three major types of Exclusions are:

• Excluded perils or causes of loss
• Excluded losses
• Excluded property

Typical examples of excluded perils under a homeowners policy are flood, earthquake, and nuclear radiation. A typical example of an excluded loss under an automobile policy is damage due to wear and tear. Examples of excluded property under a homeowners policy are personal property such as an automobile, a pet, or an airplane.

The Conditions 

Conditions are provisions inserted in the policy that qualify or place limitations on the insurer’s promise to pay or perform. If the policy conditions are not met, the insurer can deny the claim. Common conditions in a policy include the requirement to file a proof of loss with the company, to protect property after a loss, and to cooperate during the company’s investigation or defense of a liability lawsuit.

Definitions 

Most policies have a Definitions section, which defines specific terms used in the policy. It may be a stand-alone section or part of another section. In order to understand the terms used in the policy, it is important to read this section.

Endorsements and Riders

An insurer may change the language or coverage of a policy at the time of the policy renewal. Endorsements and Riders are written provisions that add to, delete, or modify the provisions in the original insurance contract. In most states, the insurer is required to send you a copy of the changes to your policy. It is important that you read all Endorsements or Riders so you understand how your policy has changed and if the policy is still adequate to meet your needs.

Want to Review Your Policy? 

To obtain a copy of your insurance policy, please contact your insurance agent or company.

Introduction

Insurance is a way of protecting yourself from costs due to damage to your property or your health. A premium is the amount of money you pay to an insurance company to have an insurance policy to cover you for all or part of these costs. Insurance companies assess the risk on a particular policy and then calculate the premium to be charged. You can pay a premium monthly or annually. The Competition and Consumer Protection Commission (CCPC) has information that explains how different types of insurance work.

Insurance policies are generally renewed once a year. Coming up to renewal date, you should shop around to see if you are getting the best value for money.

Different policies have different terms and conditions so make sure you know what the terms and conditions of your policy are. It is important to understand exactly what your insurance policy covers when you buy it.

Home insurance

You are not obliged by law to insure your home but if you have a mortgage most lenders will insist that your house is properly insured. In general, your insurance should cover contents as well as the structure of your home. However, you can get insurance for the contents of your home separately from insurance for the building, for example, if you are renting and do not own your home. The CCPC has detailed information on home insurance.

Mortgage protection insurance

When taking out a mortgage, you need to think about how it will be paid off if you die. You will generally be required to take out mortgage protection insurance. You should also think about how to continue repayments if your income falls, due to illness, unemployment or other reasons. You can find out more about insurance protection on mortgages.

Motor insurance

It is a criminal offence for drivers to drive uninsured on public roads in Ireland. You can find out more about motor insurance.

Health insurance

Health insurance is used to pay for private care in hospital or from various health professionals in hospitals or in their practices. There are several health insurers in Ireland. You can find out more about health insurance.

Travel insurance

Travel insurance can cover you if you become ill or have an accident while you are on holidays or travelling.

If you are travelling within the EEA or Switzerland, you should have a European Health Insurance Card which allows you to access health care services. In general, travel insurance should supplement the services available to people with a European Health Insurance Card.

You can find out more about travel insurance and other things to consider when travelling abroad.

Life insurance

A life insurance policy can provide money for dependants if you die. The CCPC has detailed information about life insurance.

Complaints

If you have any problems with an insurer, you should first take this up with the customer service department of the insurer (or your broker/agent if you are using one). The Central Bank of Ireland enforces the Consumer Protection Code for financial services providers (including insurers and intermediaries). The code sets out how they deal with their customers.

If you are not satisfied with how a financial services provider is dealing with you, or you believe that they are not following the principles or rules of the Code, you should first complain to the provider. Under the Code, financial services providers must have a complaints procedure in place and must handle your complaint speedily, efficiently and fairly. There are detailed rules in the Code about how often a firm should contact you to keep you updated on your complaint. You can read more about the rules around how firms must handle complaints in the Central Bank of Ireland's consumer guide to the Code (pdf).

If you cannot resolve your problem or if you are not satisfied with how your complaint is being handled, you can take your complaint to the Financial Services and Pensions Ombudsman. The Ombudsman is an independent, statutory body that can investigate your complaint.

Insurance Ireland provides consumer information and a free Insurance Information Service (IIS) for members of the public. The IIS can help you if you want information about insurance, or if you need help in resolving a problem with your insurance company. This service will also investigate complaints that fall outside the scope of the Financial Services and Pensions Ombudsman.

The Competition and Consumer Protection Commission gives information and advice about making insurance claims and complaints about financial service providers.

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