Insurance policies can be complicated to understand. Determining what the policy covers and does not cover is easier when you know how insurance policies are typically structured. The majority of policies are composed of pre-printed documents that are attached and referenced through the custom declarations pages. Please view the image to the right for a diagram of how the policies are structured. Below is a description of each part of the policy:

• Declarations
  The “declarations” page is usually the first page of the policy. It is often typed instead of being on a pre-printed form. It will show who the “named insured” of the policy is, and will list the type of coverages that are provided in the policy (such as “liability” or “commercial auto” or “workers’ compensation”). The declarations also list coverage limits for each type of coverage (in other words, the amount of coverage that has been purchased), and will list the endorsements that are part of the policy.
• Definitions
  The “definitions” explain how the insurance company has used certain words or terms in the policy. For example, the policy is likely to refer to the insurance company as “us.” The term “us” will be a defined term in the policy. Similarly, the policy will refer to “you” and that term will be defined to mean “the named insured described in the declarations.”
• Coverages
  The “coverages” contain the promises that the insurance company has made. They explain what the policy provides coverage for.
• Exclusions
  “Exclusions” are provisions that take away coverage that would otherwise be provided by the policy. For more information about exclusions, read this article.
• Conditions
  The “conditions” explain what the policyholder must do in order to qualify for coverage in the event of a loss, and explain how losses will be paid. Some conditions in the policy will be strictly enforced. Others, by contrast, will be subject to statutes or legal rules that effectively make them unenforceable.
• Endorsements
  “Endorsements” are special provisions added to the policy to change its terms. They are most commonly used to modify the terms of a policy after it has been issued. Rather than issue an entirely new policy, the insurer will simply issue an endorsement that refers to the part of the policy it is changing, and which will replace that provision. Sometimes, insurance companies will issue a basic policy, but will allow the policyholder to purchase additional types of coverage by paying an increased premium. These special coverages will often be added by endorsement.

It can sometimes be difficult to differentiate between the parts of a policy. Insurers may limit coverage by defining policy terms in a special way. Or they may include language in one section of the policy that would seem to belong in a different section. For example, they may limit the scope of a coverage with exclusionary language contained within the insuring clause, instead of in a separate exclusion. Or they may limit the scope of an exclusion by inserting language that creates an exception to its operation (called an exception to an exclusion).

As a result, it is often difficult for business owners to read and understand their insurance policies. At BearWise Landscapers, we are available to assist your landscaping business in understanding the coverage terms offered by each policy. Please review your policies and feel free to contact our agents with any questions regarding your insurance.

The Agent Articles section of BearWiseLandscapers.com allows our insurance agents to provide practical information for landscapers. These agents can also obtain quotes and establish a custom insurance program for your landscaping business through our access to a variety of insurance carriers. This agent article is filed under (1) Insurance, and you can follow comments to it through the RSS 2.0 feed. Feel free to leave your own response below: