Insurance Law Lesson 2: What’s in a Policy

An insurance policy is a contract. Simple contracts are frequently a single document. Like a purchase order. Or a car rental agreement.

Even simple insurance contracts tend to made up of multiple policy forms. Complex policies can have dozens.

There are exceptions. But, most insurance policies are not so much “written” for a particular insured as they are assembled. Even then, some policies are pretty much straight off the shelf for entire classes of policyholders.

The policy begins with a main policy document. The basic general liability, homeowners, workers comp, etc., form. Then additional forms are taken off the shelf if any changes are necessary.

There are forms that alter certain language to take into account the state you live in. There are forms that add additional categories of coverage. There are forms that remove, or exclude, certain coverages. There are forms that add additional parties as insureds, and those that remove persons or classes of persons from being insureds.

These additional policy forms are terms “endorsements” or sometimes “riders.”

This system saves lots of time in underwriting.

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