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The 7 Sections of an Insurance Policy Document

By December 7, 2022January 11th, 2023Insurance

An insurance policy document is like a roadmap. Like a map, it helps match the customer’s expectations to the underwriter’s reality, including how to make a claim. 

In other terms, it is a reference document that includes details on the insured (the person who is covered), the premium that you will pay, the risk that is covered, and the sum assured or insured. Additionally, it contains information about your benefits, exclusions, and the claim filing process. Even if your policy document is too long to read, you must understand it, and a policy document can help you in this case.

Your insurance company issues this document outlining the terms they provide coverage. It is essential for anyone who wants to protect their assets and provide for their loved ones in case something should happen. Here are some of its benefits.

Why is an Insurance Policy Document Important?

  • It details the specifics of the insurance coverage.

The insurance policy document is a legally binding contract between the insurer and the policyholder. 

It outlines the specific terms and conditions of the insurance coverage, including the sum insured or assured (the maximum amount that the insurer will pay out in the event of a claim), the required premium payments (the amount that the policyholder must pay to maintain the coverage), and any exclusions or limitations on the coverage.

For example, suppose you have a health insurance policy. In that case, the policy document will detail what medical expenses are covered, your deductible/policy excess, and how much you will need to pay out of pocket for certain services.

  • It helps the insured appreciate the provisions, guidelines, obligations, and duties outlined for each party.

The policy document helps the insured understand their rights and responsibilities under the policy. It outlines the provisions, guidelines, obligations, and duties that apply to the insurer and the policyholder.

For example, the policy may require the policyholder to pay their premiums on time, report any accidents or losses promptly, and cooperate with the insurer to investigate and settle claims. 

On the other hand, the insurer has to provide the coverage outlined in the policy and act in good faith when handling claims.

  • It spells out your insurance policy dates and premium payment intervals. 

The policy document also specifies the beginning and end dates of the insurance coverage, as well as the premium payment intervals. You need to know this as you must ensure that your coverage is up to date and that you pay premiums on time.

Suppose there is a material change to the policy (such as adding an asset, a family member, or changing the policyholder’s location). In that case, the insurer may issue an endorsement as an addendum to the policy.

  • It helps you understand how to file a claim for each type of coverage.

By reading and understanding the policy document, you can identify any potential gaps in your insurance coverage and take steps to address them.

For example, if the policy does not cover flood damage and you live in a flood-prone area, you may consider purchasing additional flood insurance. Additionally, understanding the policy document can help the policyholder know how to file a claim for each type of coverage.

For example, if you need to file a claim for car accident damage, knowing what documentation you need to provide is a must, for example, how to report the accident to your insurer and the steps they need to follow to receive payment.

Sections of an Insurance Policy Document

1. Declaration Page

It is the first section you will encounter. This section highlights some of the critical information about your policy. 

The details you will find in this section include the following; 

  • Policy period
  • Policy number and premium amount
  • Type or name of the coverage 
  • The names of the individuals insured
  • The assets covered (where applicable)
  • The coverage limitations

2. Policy Coverage Part of an Insurance Policy Document

This section gives a detailed breakdown of the following;

  • How and when your coverage takes place? 
  • The type of coverage offered is described, along with how deductibles, limits, and sub-limits relate to insured losses. 

The policy coverage section should be your next stop if you have a question about your policy that the declarations page still needs to answer.

3. Insuring Agreements 

This is an important section of the policy document. It specifies who is insured by the policy, what is covered, and what the insurer commits to do and not do in exchange for your premium. Insuring agreements frequently provide a general summary of the scope of coverage.

4. Exclusions 

This section contains a list of things the policy does not cover. 

It may exclude the following:

  • Specific losses
  • Hazards
  • Property kind 

For instance, home insurance lists floods and other risks under exclusions. You must get that policy separately if you need or want flood insurance.

5. Conditions 

Most policies also contain a section outlining specific conditions the insured must meet for claims to be paid. Common ones include timely claims reporting, submitting official proof of loss documents, policy excess, and cooperating when the company is accessing your claim.–9D8OjU Common

6. Riders

They are optional benefits; if you decide to include them in your insurance policy, that would be stated in a separate section of the contract. Through an endorsement, the insurer may also change the terms of your agreement. For example, if your policy is coming up for renewal, that could mean a change in premiums. 

7. Glossary 

Keywords are described in the glossary section of policy documents. If you need to become more familiar with common insurance terminology, reading this section of your policy document will help you better understand what you are accepting.

Final Thoughts: Reviewing your Insurance Policy Document

The insurance policy document helps both parties understand their rights and responsibilities under the contract. Individuals or business owners need to review their insurance policies thoroughly before signing them and ask questions about any uncertain terms so they can fully understand their agreement with their insurer.

Suppose changes occur during the duration of the contract, such as an increase in premiums or limits of liability. In that case, all parties need to receive notification from their insurer so that everyone can remain fully informed about their obligations under the agreement. 

Lastly, understanding your insurance policy will help you know what you are covered for should something unexpected happen, requiring you to claim on your policy. Need help with your insurance? Get in touch with us today; you can also book a free consultation with one of our experts.

Book an online consultation session with one of our team members for an immediate response to any insurance query you have. We are always happy to help.


Jilian Marwa, our underwriting trainee, wrote this blog post. Follow her on LinkedIn. Revised by Caleb Mutemi, a digital marketer with an impulse for content strategy. Reviewed and approved by Ken Kairu, CEO of Dawit Insurance.