August 22, 2024
If you have an insurance claim, it may be determined based upon the wording of your insurance policy.
These are complex documents that are often hard to understand.
THE BASICS
- Every word means something.
- Words are given their plain meaning, unless they are a defined term.
- Words are read in context.
- The purpose of the policy matters
- Absurd results will be avoided- common sense applies.
BEYOND BASICS
A policy typically has five sections that are important to understand:
- The declarations page.
- The grant of coverage.
- Exclusions.
- Exceptions to exclusions.
- Definitions.
THE DECLARATIONS PAGE
This is what most people read. It may be the only document sent to you annually by the insurance company.
First important thing to know is that this summary of coverage is just that- a summary. To properly appreciate the extent and terms of coverage, the body of the policy is needed. Often to know what form of policy to read, if you are not provided with a complete copy (usually as a booklet), the numbers of the document forms are listed on the declarations page.
These forms must be provided by your insurer upon request. Increasingly, they may be found on the insurer’s website.
If you receive a booklet with a new policy, hold onto it- the insurer will not necessarily send one next year.
Increasingly, insurance documents, including declarations, are written in “plain English”, but often the language even on the declaration page is typical. Do you know the difference between “bodily injury” and “personal injury”?
The declaration gives information about not only what is covered, but for how much money. Some declarations include a “single policy limit” or a “guaranteed replacement cost” option for certain coverages (like loss of your house due to fire). If they are on the declarations page, that is good. If not, do not despair – guaranteed replacement cost” may be included in the coverage terms.
THE GRANT OF COVERAGE
Beyond the declaration page, the next thing to read and understand is the grant of coverage. There will be a separate grant for each coverage under the policy- so for a homeowner, expect one for at least “loss or damage to the home”; “contents”; “liability”.
If there is no coverage here, there is no coverage. However, each section will contain a breakdown of what is covered. This is in law read broadly, to extend coverage to insureds if there is ambiguity or uncertainty as to how the policy applies to certain facts.
Beyond coverage, these sections contain other valuable information, including “the basis of loss settlement”, which determines how much you may be paid in what circumstances. This will vary with each type of coverage.
EXCLUSIONS
The grant of coverage is likely very broadly worded, but don’t be fooled. The insurer gives (“loss caused by any means”) then takes parts away (“we do not cover…”). The meaning of exclusions is often the source of coverage disputes, since the application of the exclusion depends very much on the facts of each case.
This is an area where you need to be cautious- insurance representatives give you their interpretation, but they may not know the right answer. Only judges can say that. Lawyers are typically better trained than company reps and know how to apply the wordings to your individual situation.
Exclusions will be read in the way that is more favourable to the insured, especially in cases of ambiguity.
The saying is “coverage is read broadly; exclusions are read narrowly.”
EXCEPTIONS
Many exclusions come with exceptions to the exclusion (“we will not cover…unless…”).
These may be combined into the wording of the exception, or listed separately,
An exception, like coverage, is read “broadly,” or favourably to the insured.
DEFINITIONS
Policies may contain a general definition section, or one for each coverage, or both.
Knowing what words are defined is crucial. Always check the definitions. It is these provisions that give words special meanings, not their plain wording, or explain difficult or technical terms such as “pollution.”
WHAT WEILERS LLP CAN DO FOR YOU
At Weilers, we have experience dealing with insurance companies, and reading policies. If you require help dealing with your insurer, you may give us a call at Weilers LLP. We do not help you for free, but our fees are often a sound investment. If we cannot help you economically, we will let you know.