If you’re like most business owners, reading and understanding your property and casualty insurance contracts is very low on the priority list. Hey, that’s what you pay an insurance agent for, right?
  It’s fair to expect your insurance agent to inform you of everything that affects your insurance protection, but that is not always the case. Often you will notice a statement similar to the following on the proposal: “This proposal is written in layman’s language. The actual insurance contracts should be consulted for specifics of coverage and will be used to settle claims.”  This statement is meant to transfer some responsibility to the business owner to read and understand their insurance policies.
  As a commercial insurance agent for over 26 years and part owner of the company I work for, I sympathize and am here to help.
  It’s important to remember  each section of the insurance policy must be considered to determine what is, and not, covered. Here are the major sections of your insurance policy and what to look for:
  Declarations: While a large portion of your insurance policy is boilerplate, the declarations section of the policy is customized to your individual business. Specific values for your building, personal property, business interruption, payroll, sales, fleet list, etc. appear in this section. The declaration section is easy to identify, because it is the only portion of the policy where information is manually typed in.
  When reviewing the declarations, make sure the information shown is accurate and is what you intended to buy. Also, make sure your primary company name is correct and any additional corporate entities are also listed.
  Coverage Form or Insuring Agreement: As you might suspect, this section outlines which losses are covered and which are excluded.
  For instance, a standard general liability policy promises the company “will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which the insurance applies.”
  Reassuring, isn’t it? This jargon can be confusing and leave the insured asking which damages does the insurance actually apply to?
  As with most things in life, the devil is in the details. With an insurance policy it is easier to determine what is covered by reading what is not covered.
  When reviewing the coverage form read the exclusions. The coverage form is generally a boilerplate, but if you have concerns with any of the exclusions insurance companies can often modify the exclusion by attaching an endorsement to the policy.  Speak with your agent if you have concerns.
  Definitions: The definitions section, as you might guess, defines the terms used in the coverage form of the policy. This section is often overlooked, because many people feel  we all take similar meanings from words in the English language. That may be true in the everyday world, but not in the world of insurance.
  For instance, a liability policy I reviewed recently defined property damage to include “tangible property only,” which served to exclude damage to electronic data, which is intangible. For my client covering electronic data was important.
  When reviewing the definitions be sure to read and understand everything listed. This will further clarify the coverage established by the coverage form.
  Endorsements: From time to time insurance companies will seek to modify the basic coverage offered by their policy by issuing endorsements. 
  These endorsements may offer additional coverage to allow them to better compete for your business, or may limit or eliminate coverage in certain areas.
  Often endorsements, which limit coverage, are in response to large, unpredictable claims the company feels cannot be accurately underwritten (charged for) or afforded.
  For instance after 9/11/2001, insurance companies endorsed policies to exclude terrorism coverage. This coverage can now be bought back for a small charge, but the original endorsement was added and many of the policy owners could have not been aware. Often time these are added without notice as part of a policy modification.
  When reviewing the endorsements, determine if any of them will reduce your coverage in a way that is unacceptable. Ask your agent for his or her opinion and agree on an action plan if the endorsement can be negotiated.
  Conditions: The conditions section outlines the responsibilities the insured must fulfill to qualify for coverage if a loss occurs. 
  A typical condition is one requiring the insured report any loss in a “timely manner.” If a visitor breaks his arm after tripping over your worn out rug and you do not report the incident until you get a legal letter the day before the statute of limitations runs out two years later, it’s a safe bet the insurance company will determine you have not met the condition for timely reporting.
  Other typical conditions include cooperating with the insurance company during the investigation of any claim, allowing inspections by the insurance company and notifying the company of significant changes in your business operations.
  When reviewing the conditions read them carefully and be sure to take note. Claims, which could otherwise have been covered, are often denied due to failure to meet policy conditions.
  It can seem daunting, but don’t fret over every detail. If you have learned your policy has a number of sections that are all important in determining your coverage, you are probably ahead of the average business owner.
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Article provided by Joseph L. Pilato, CPCU of MCRA Insurance