Insurance Policies
By Oni Harton, J.D. | Legally reviewed by Melissa Bender, Esq. | Last reviewed June 25, 2024
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Just about everyone has an insurance policy of one type or another. Whether the insurance is for your small business or household, insuring against risks is a wise financial move. In some cases, such as automobile insurance, you are legally required to have insurance.
Insurance policies come in all varieties. But some aspects of insurance policies are generally universal. For example, policies include a declaration page. It identifies the following:
- Who is insured
- The risks of property covered
- The amount of coverage
- Other standard information
Regardless of the type of insurance product purchased, an insurance policy is a legally binding contract. FindLaw's Insurance Policies section will help you make sense of your insurance policies and make better coverage decisions.
It's important to have the proper amount of coverage and avoid paying for something you may not need. This section will inform you about the following and more:
- Common types of insurance
- How deductibles and premiums work
- The purpose of the insurance declaration page
- The meaning of a copay
Types of Insurance
Many types of insurance products meet consumer demand. An experienced insurance agent can provide information on everything from types of liability coverage, life insurance quotes, whether personal property coverage is available for particular perils, and more.
Common types of insurance are discussed below.
Health Insurance
Health insurance coverage is considered a necessity for most people. Health care could require anything from routine medical exams and prescriptions to life-saving surgery. For most people, having a health insurance plan is best to help cover medical expenses.
Depending on what type of insurance coverage you have, you could have the choice from among several providers. Learn more at FindLaw's Health Insurance page.
Life Insurance
Life insurance can serve many purposes. The type of insurance policy and life insurance coverage available to beneficiaries depends on your financial situation. Having life insurance in place should bring peace of mind, knowing that your dependents and other loved ones will be taken care of should you pass away.
The types of life insurance options available from life insurance companies vary widely. It's critical to understand the different types of life insurance policies available. They can include the following:
- Term life insurance policies
- Permanent life insurance policies
- Whole life insurance policies (a type of permanent life insurance)
- Universal life insurance policies, including variable universal life insurance (a type of permanent life insurance)
A financial professional or licensed insurance agent can explain the insurance products that would work best in your situation and what underwriting would require. They can also help you use a life insurance calculator to predict insurance costs, payouts, and cash value. Learn more about life insurance at FindLaw's Beginner's Guide to Life Insurance: When Is It Right for You?
Auto Insurance
Automobile insurance is one of the most common types of insurance consumers purchase. Each state sets its minimum coverage requirements. Like all insurance, automobile insurance involves a contract between the insurer and the policyholder. It can cover the following:
- Medical coverage: Pays costs for treating injuries, rehabilitation, and sometimes lost wages
- Liability coverage: Pays for the policyholder's legal responsibility to others for bodily injury or property damage
- Property coverage: Pays for car damage or theft
Other types of auto coverage involve uninsured and underinsured motorist coverage, comprehensive, and collision. Learn more on FindLaw's Automobile Insurance article.
Homeowners Insurance
Homeowners insurance is essential for most people to protect their investments. A standard homeowners insurance policy covers the following:
- Dwelling coverage
- Other structures
- Personal property
- Loss of use
- Personal liability
- Medical payments
When purchasing homeowners insurance, it's important to understand any exclusions to your basic homeowner's policy. You'll want to purchase additional coverage based on your needs. Learn more on FindLaw's Homeowners Insurance article.
Parts of an Insurance Policy: At a Glance
Insurance policies are often quite lengthy and contain complex language and concepts. It's helpful to understand basic terminology common to insurance policies. Key parts of an insurance policy are listed below:
- Declarations: Name of the insured party, risks/interests covered, amount insured, deductions (if applicable), policy period, premium amount
- Exclusions: Lists all that is specifically not covered under the policy
- Conditions: Rules, duties, and obligations for coverage eligibility
- Endorsements: Policy forms that modify the agreement, often concerning a certain condition
- Riders: Used to state the terms of amendments to an insurance policy, such as name changes or changes in benefits
Copays, Premiums, and Deductibles
Virtually every insurance policy has premiums. Whether it's auto insurance, a health plan, homeowners insurance, or life insurance, policyholders must pay an insurance premium for coverage.
In general, higher premiums offer a more comprehensive type of coverage. But this is only sometimes the case. Insurers set the premium cost based on several factors, including the following:
- The level of risk involved
- The cost of honoring claims
- Where the policyholder lives or does business
- Other business concerns
Premium to charge, including the level of risk involved, the cost of honoring claims, where the policyholder lives or does business, and standard business concerns (i.e., the need to compete with other insurers)
Insurance deductibles are the amount of money insured individuals may be required to pay out-of-pocket before insurance benefits begin.
For example, a health care insurance plan with a $2,000 annual deductible requires its policyholder to pay the total price for prescription drugs, routine checkups, hospital visits, and other "covered" services until reaching $2,000. After reaching the deductible, the insurance company covers your health insurance costs.
The insurance copay is another insurance cost. It's a recurring fee paid by policyholders. Insurance contracts often require a copayment for any of the following:
- Prescription refills
- Medical office visits
- Other services covered under the policy
For instance, you may have to pay a $25 copay each time you visit your doctor or fill a prescription. Copayments usually don't count toward the deductible. Among other things, copayments are intended to prevent policyholders from overusing covered services.
This is just a brief overview of the average insurance policy. For more detailed information, click on the link below.
Do You Have Questions? Get Legal Help
If you have questions about your insurance coverage or are having trouble with a claim, an attorney can help. Meeting with a lawyer can help you understand your options and how to best protect your rights. Find an experienced insurance lawyer near you today. They can explain your legal options.
Learn About Insurance Policies
What Is an Insurance Deductible?
Explanation of the insurance deductible, which is the amount of money covered individuals must pay out-of-pocket before the insurance company will begin paying for coverage.
What Is an Insurance Copay?
A brief overview of the often-nominal payments made when picking up a prescription or visiting a doctor, called copays, and their intended purpose of limiting one's use of insurance benefits.
Understanding the Insurance Declaration Page
How to decipher the declaration page of your insurance policy. This page identifies who is covered, which risks or property the policy covers, the coverage policy period, and more.
Parts of an Insurance Policy
A helpful guide to various parts of an insurance policy and their relevance to you as a policyholder, including the declaration, the list of exclusions, and the conditions of your policy.
Premium vs. Deductible
Summary of what constitutes an insurance premium. A premium payment is the amount of money paid for insurance coverage. A deductible is the amount paid out-of-pocket before benefits kick in.
Understanding Insurance Limits
A helpful guide to understanding the limits of a given insurance policy's coverage. It includes time limits for making claims, situations that are specifically excluded, and more.