Reading glasses on a stack of paperwork

Pay Attention to The Fine Print: Reading Your Insurance Agreement

Insurance Agents

Reading your insurance agreement is crucial for insuring yourself properly for unforeseen circumstances such as automobile accidents, home fires, and illnesses. It’s one of the most important documents you will ever sign. If it doesn’t make sense or if there are terms you don’t understand, ask questions before you sign. Insurance companies want to sell their products, and they try to do so in every way possible. Sometimes they include fine print that is not readily apparent to customers. This article discusses what to look for when reading your insurance contract and where to go for help if needed.

Read Your Contract Carefully Before Signing

The first thing to look at is the small print. Not just the important things like coverage limits and deductible amounts, but also any other conditions on your coverage. Most auto/homeowners policies contain a supplement called “Exclusions.” An exclusion is anything stated in the policy that directly bars coverage. Your policy might also have Exclusions listed under Conditions, which could bar coverage if certain conditions occur. If you can’t find these exclusions in the main contract, check with your agent on the company website or call the customer service line. Often, the exceptions to exclusions are fairly obvious and easy to spot. However, the fine print often contains more subtle conditions on your coverage. Look for definitions of words you didn’t know you were using; ambiguous language (which means no clear meaning), and double-talk phrases like “as used…” or “in accordance with,” which means something different than the plain English meaning of the word.

Steps to Take When Reading the Fine Print

  1. Make sure the condition pertains to your purpose of owning and occupying the insured property. If the condition applies only to items stored away from the house, note this fact in your notes. Remember, an endorsement attached to a policy should always take precedence over the text printed in the body of the policy itself.
  2. Underline any changes or additions made by your agent and compare them to those provided in the original document.
  3. Double-check for errors and discrepancies; some contracts may state a particular term as applicable in full while the same term appears in another section of the contract with its limitations removed. Also, make sure any number given refers to the actual amount listed, not the total amount listed and all limitations.
  4. If unsure whether a clause has been added during processing, contact the insurer who issued the policy or the broker handling the claim. Ask them how they arrived at whatever wording was selected.
  5. Be careful to ensure that insurance does not conflict with the law, especially if one claims to provide legal advice.
  6. Note that even though you may be covered up to 100 percent of the expenses incurred, your out-of-pocket costs still apply in some situations. As much as you would love to say that coverage never runs out, it certainly makes good sense to read each page of your policy cover sheet and endorsements carefully.
  7. Check that your agent is aware of any material modifications to your coverage. If they aren’t, then the carrier involved won’t be either. This is often done automatically when you change carriers, so don’t assume your agent will keep track of alterations in your coverage.

Bottom Line

There’s no such thing as “an honest mistake.” A mistake is based on ignorance and lack of foresight. But reading the fine print is not a mistake but a conscious choice. People get confused about their insurance because they do not understand what their policy covers. So, if you want to avoid getting into trouble, make sure that you read every single part of your policy before signing it.

Share This Post

    Insurance Quote

    Your information is 100% secure—we’ll never spam you or sell your information.

    Our Agents Are Just a Click or Phone Call Away!