Video 1: Understand Policy Structure

Course Summary: Learn the 6 sections of the policy structure

Insurance policies generally are divided into six (6) different sections. Theses sections can best be remembered by the word “D.E.C.I.D.E.” This structured approach is a fundamental way to organizing the characteristics of an insurance policy.

1) Declarations

The Declarations section is where you will find the basic information about your policy, such as:

• The identity and the address of the named insured
• The policy term
• The policy effective date
• The policy premium
• Limits of insurance
• Coverage A (Dwelling)
• Coverage B (Other Structures)
• Coverage C (Personal Property)
• Coverage D (Additional Living Expenses)
• The policy deductible and special deductibles
• Mortgage Company or Lien holder
• Forms and Endorsements

2) Exclusions & Limitations

The exclusions section of the policy describes what the insurance company is not obligated to cover. A limitation may reduce coverage only under certain circumstances. Examples of exclusions & limitations are:

• Specific property, perils, or hazards excluded (i.e. flood damage is typically a common exclusion)
• Losses occurring from specific causes excluded in the policy

3) Conditions

The exclusions section of the policy describes what the insurance company is not obligated to cover. A limitation may reduce coverage only under certain circumstances.. Examples of exclusions & limitations are:

• Specific property, perils, or hazards excluded (i.e. flood damage is typically a common exclusion)
• Losses occurring from specific causes excluded in the policy

4) Insuring Agreement

The insuring agreement describes the contractual agreement between the insurer and insured. It describes the covered perils, risks assumed, and the nature of coverage. When dealing with “Other Insurance,” where package policies apply, each policy contains its own insuring agreement.

5) Definitions

Important terms and definitions may be spread throughout the policy language. Some policies dedicate an entire section to the definitions; however, other policies include definitions in the conditions section, and or other policy sections.

6) Endorsements

The main objective of an endorsement is to add, delete, change, or alter the policy. Other sections of the policy may be affected by the added endorsement. Examples of endorsements are:

• Personal Property Endorsement
• Windstorm - Hail Exclusion (Deletes Coverage) need endorsement to cover coastal Code Upgrade / Building Ordinance of Law Endorsement
• Hurricane Deductible % of Dwelling Limit
• Mold Endorsement (Limited Fungi Wet Dry Rot)
• Back-up of Sewers and Drains Endorsement or Sump Pump Endorsement
• Replacement Cost Value Endorsement