Insurance policies: how to read them and what to look for.

• Date: 01 January 2009
• Author: McCartney, Jim

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Insurance is costly, but necessary in some cases and advisable in others. Vehicles on a highway must be insured and mortgage companies demand that the mortgaged house or condo be insured against damage. Landlords insist that tenants carry insurance and few of us will take a long trip out of the country without travel and medical insurance. Even people who have no need of an insurance policy themselves may at some point have a claim against someone who is covered by insurance. What those policies say and mean is important.

If you can bring yourself to do it, sit down and read the policies that you have--you may find you have coverage you hadn't imagined and that you have obligations you didn't know about!

The Declarations Page

Every policy has a Declarations Page that, literally, declares what the policy covers, how much it will pay for a loss, what the deductible (if any) is, and what the premium is for each portion of the coverage. The various headings, such as "Third Party Liability" and "Pollution Liability Exclusion" refer directly to policy sections and indicate whether and what coverage is provided.

While a home insurance policy Declarations Page might show that there is Comprehensive Personal Liability coverage with a limit of $1,000,000, it does not show any coverage details. For that, you have to look at the body of the policy. Sometimes insurers, agents or brokers send out only the Declarations Page and you have to ask for the complete policy wording. You should ask--it's important.

Automobile Insurance

Insurance is mandatory throughout North America on all vehicles operated on a highway. If you think you know what a highway is, see below! (1) The wording of the Alberta policy is set by regulation and is the same regardless of which insurer issues the policy. (See full policy wording at...