Insurance Law Lesson 12: Reading the Policy

Insurance policies tend to be complicated. My view is that it is not intentional, there are those who disagree. Regardless, an insured needs to know what is in the policy. The courts will hold you to have known the terms whether you do or not. Casey v. Auto Owners Ins. Co., 273 Mich. App. 388, 394-95 (2006).

Policies have many sections. Coverage parts, insuring agreements, covered causes of loss, exclusions, conditions, definitions, endorsements (which can include some or all of the preceding).

When I read a policy, I start with the insuring agreements (including those in endorsements) because if the given claim doesn’t fall within, then the case is over.

Policies are littered with defined terms. These are usually in bold or in quotation marks, but this is not always the case. I flip to the definitions as I read through so I can understand as I am reading. Note that definitions are sometimes inconsistent between coverage parts, and even in different forms relating to the same coverage part.

As I go through a policy, I set aside forms that are completely irrelevant. Then, after the initial run, I review all of the potentially relevant material again.

There is no getting around it. It’s a chore.

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