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In the United States an insurance policy is simply the written contractual statement of the agreement between the insurance company and the policy holder (or customer).policy

What is likely to be included in an insurance policy?

Your insurance policy may include some or all of the following items, the exact wording and content will depend on local state laws as well the type of insurance policy that you may have, if you wish to understand any of these items better you should refer to your own insurance policy or discuss your questions with your insurance agent or broker.

  • The premium – the premium is the amount of money you will pay for the period of the insurance coverage, this may be a one-off amount or a recurring amount (typically on a monthly or annual basis)
  • The deductiblethe deductible is the amount you will have to pay prior to your insurer paying out their obligations in the event of a claim made under the policy
  • The specific perils insured against – insurance is about protecting an individual from risk, the specific risk is known as a “peril” most insurance policies will contain a list of “named perils” that the insured party is covered for, if a specific peril is not listed in the contract it is unlikely to be covered by the insurance policy unless that form of coverage is specifically required by state law
  • Claim limits – claim limits are the amounts identified by your insurer as the maximum payment they will make in the case of any individual claim, your policy may have multiple claim limits with respect to different perils
  • Policy limit – the policy limit is the maximum amount your insurer will pay over the whole policy with respect to all claims made under it, this may or may not be the same as an individual claim limit
  • Exclusions – any instances which the policy specifically does not cover, for example in the case of auto insurance it may specifically exclude any incident when the driver is under the influence of illegal or prescription drugs and/or alcohol
  • Any relevant personal and insurance company details – normally this will be limited to the name and address of the policy holder and in the case of the insurance company will normally include their address and a means of contact in case you need to make a claim

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