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How To Read A Commercial Insurance Policy

  • Adroit Insurance and Risk
  • May 24, 2022

A commercial insurance policy is a contract outlining the coverage that the insurance company will provide to your business in the event of a covered loss.

Commercial insurance policies can be complex and difficult for ordinary business owners to decipher on their own.

But it’s important for you to understand your policy, so that you can be prepared for whatever unexpected challenges come your business’s way.

While an average insurance broker might not care about whether or not their clients understand their commercial insurance policy, at Adroit we want to make sure that you know what you’re signing up for.

From knowing what types of insurance are available to understanding the policy limits and deductibles, our team of professional Insurance Brokers / Risk Advisers will guide you through the process of obtaining your policy, so that you can get the right coverage for your business.

If you’re wanting to secure the best protection for your business in case of an unforeseen event, contact us today and receive personalised insurance advice and solutions.


A checklist for reading your insurance policy

1. Understand the basics

The first page of any commercial business insurance policy is usually the Declarations page.

This page is basically an overview of your entire policy and lists a few fundamental features of your insurance, including:

  • The name of the insurance company
  • The name of the insured business
  • The date and duration of the policy
  • The type of insurance coverage

It will also state the policy limit, which is the maximum amount that the insurance company will pay for a covered loss, as well as your deductibles.

When reading this section, it’s important to make sure that the right parties are insured, so that your coverage works for who and what you need it to.

This page is essential reading for any insured business owner.

Even if you don’t read beyond the Declarations, knowing these details can provide you with a useful framework for making sense of your policy and the type of coverage you’ll receive.

2. Read the definitions

Every commercial insurance policy will also come with a list of specifically defined terms.

These definitions shouldn’t be glossed over, as they often determine how the coverage applies to your business. For example, in some policies, the term “occurrence” might be defined as an accident, while in others it might be defined as an event.

As such, reading the definitions will not only help you understand the rest of the report, but it will also give you an idea of how your policy will operate in reality.

3. Analyse the insuring agreement and conditions

Insuring agreements are an integral part of any policy, as they explain in detail what the insurance company agrees to cover.

Each section of the insuring agreement will also have its own specific conditions, which the insured must meet in order to receive coverage from the insurer.

For example, suppose you’re a small business owner who has just purchased commercial building insurance. Your insuring agreement will tell you what is covered under your policy (e.g., damage caused by fire, storms or break-ins) and the timeframe within which you must report an incident in order for it to be covered (e.g., 2 weeks).

4. Pay attention to the exclusions

Exclusions are those things that are specifically not covered by the insurance policy.

Exclusions can vary greatly from policy to policy, so it’s important to read your insurance policy carefully and understand what is and is not covered.

Sticking with the example of commercial building insurance, suppose your building has also accumulated some general wear and tear over the years, such as mould or other defects. These would typically be excluded from your coverage – in other words, any associated repairs that you undertake won’t be covered by your insurer.

5. Review the endorsements

Endorsements can be thought of as addendums – additions or changes to your original insurance policy that are often included at the end of your policy report.

They can be made for a variety of reasons, such as to increase or decrease coverage, to add or remove named insureds, or to change the policy’s effective date.

It’s necessary for you to focus on these endorsements, so that you’re getting the most up-to-date information about your policy.


Main takeaways for reading insurance policies

No matter what type of commercial insurance you’ve obtained, whether it be workers’ compensation or liability insurance, there are a few main things you should pay attention to when reading your insurance policy.

These include your coverage limits, exclusions, deductibles, insuring agreements and conditions, and your policy’s term.

If you’re across these details of your policy, you’ll be well prepared to tackle any unexpected claims that come your business’s way.

The most important thing to remember is that, if at any time you have questions about your policy, don’t hesitate to reach out to your insurance broker.

When you partner with Adroit, you can rest assured we’ll guide you through the ins and outs of your entire policy, and always be there to answer your questions or concerns.


The experts at Adroit can help you understand your policy

At Adroit, our goal is to provide our clients with the best possible advice and insurance solutions. As part of this, we’re dedicated to helping you understand your policy, so that you feel ready to deal with any unforeseen claims.

For an insurance broker you can trust, get in touch with us today and receive a personalised quote or more information about how to read your commercial insurance policy.

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