An insurance policy is a contract between an insurance company and the insured. Under this contract, an insurance carrier will agree to pay money to the insured in the event of a covered loss. A covered loss is a loss that the insurance carrier has agreed to protect the insured against in the event of its occurrence.
There are two very important things to remember when reading an insurance policy. The first is to identify clearly what covered losses are part of the policy. Remember, an insurance carrier has no obligation to provide coverage for a loss that is not covered. One of the most frequently excluded areas are claims that involve an intentional act on the part of the insured such as an assault or fight.
The second area that must be read carefully is the limit of coverage. The limit of coverage is the maximum dollar amount the insurance carrier will pay in the event of a loss. For example, an automobile insurance policy may have medical payments coverage of $1,000. This means the insurance policy will pay up to $1,000, but no more, for medical bills sustained by a driver or passenger in the event of an accident.
Andrew J. Piela is a Director at Hamblett & Kerrigan, P.A. Mr. Piela concentrates his practice in civil litigation, family law, probate and land use litigation. You can reach Attorney Piela by e-mail at [email protected].