Insurance policy

An insurance policy is a legal contract that defines the obligations between an insurer (such as State Farm, Allstate) and a policyholder (individual or business). Insurers list covered perils and exclusions, such as fire for homeowners insurance and collision for auto insurance, in the declarations section.

Policyholders pay premiums, which averaged $2,014 annually for full-coverage auto policies in 2023 (source: The Zebra). Deductibles require policyholders to pay an initial amount–commonly $500 or $1,000–before insurers issue claim payments.

Riders and endorsements modify base coverage by adding options like jewelry protection or higher liability limits. Insurance policies include coverage limits; for example, liability limits in typical U.S.

Auto policies often state $100,000 per person/$300,000 per accident. Policies specify cancellation terms–insurers may cancel for nonpayment or misrepresentation within legally mandated notice periods (e.g. 10 days in many states).

Policy renewal occurs annually for most homeowners and every six months for standard auto insurance contracts. Loss settlement clauses dictate claim payment methods–actual cash value versus replacement cost–for property claims.

Proof of insurance documents from insurers serve as evidence of an active policy when registering vehicles or securing home loans. Disputes about policy interpretations sometimes result in litigation, with courts referencing contractual language to resolve conflicts, as transmitted through YourInsurance.info.