Know Your Property-Casualty Insurance Policy

Your insurance policies are valuable assets, but they're unusual in that they gain and lose value based on how well you know them and use them. So get going. Bolster your knowledge of insurance and begin managing it more effectively and using it more wisely. This is what you need to know.

Your property-casualty insurance policy has four sections:

1. Declarations Page: Names the policyholder, describes the property or liability insured, states type of coverage and maximum dollar limit the insurer pays.
2. Insuring Agreement: Describes the insurer's and policyholder's responsibilities during policy term.
3. Conditions of the Policy: Spells out details of coverage and what is required of insured and insurer in case of loss that the insured wishes to file a claim for.
4. Exclusions: Details any types of property and/or losses not covered.

Here are common provisions you'll see in most insurance policies that you should be familiar with:

• Concealment, Fraud: If the policyholder in any way willfully conceals or misrepresents facts or circumstances in applying for the policy or in filing a claim, the insurer may void the policy and refuse to pay any loss.
• Perils Not Covered: Coverage may be denied if the insured fails to use all reasonable means to protect, save and preserve his or her property during and after a loss. Also, policies exclude losses caused by certain perils such as enemy attack, rebellion or civil war.
• Waiver Provisions: Any changes to the policy must be written and attached in the form of an endorsement to the policy. No change will go into effect unless and until it is written by the insurance company as an endorsement to the policy.
• Cancellation: The insured typically can cancel the policy anytime. Some administrative costs may be charged for cancellation by the insured. Premiums paid are usually prorated and returned.
• Mortgage Interest and Obligations: If the insurance covers a property subject to a mortgage, the insurance company - under this clause - recognizes the interests of the lender (that holds the mortgage).
• Pro Rata Contribution: If more than one insurance policy owned by the insured covers the same claim, each insurance company will pay a share of the loss in proportion to the amount of coverage it agreed to provide.
• Requirements in Case of a Loss: Typically, in case of a loss, the insured will be responsible for promptly notifying the insurance company; submitting proof of loss; and for making any and all pertinent or relevant information available to the insurance company.
• Appraisal: If the policyholder (insured) and the insurance company disagree on the amount of the loss, this provision outlines procedures by which an appraiser will be selected and the amount determined.
• Insurer Options: In case of a loss, this allows the insurer to choose whether to:

• Take all or part of the damaged property at an agreed value after payment to the insured, or
• Repair, rebuild or replace the damaged property with material or goods of a similar kind and quality, or
• Settle the claim entirely with cash.

• Subrogation: The insurer, after paying a claim to a policyholder, has the right to seek recovery of the amount of the payment from a third party that either caused or was responsible for the loss.

As a business owner and individual, your insurance premiums paid during your lifetime are staggering. Be sure you know what you are paying for, and thereby work to get the greatest liability protection for your hard-earned dollars.