Policy Structure & Provisions
Every personal lines policy shares a common structure and a set of standard provisions. This chapter covers the four parts of a policy, key conditions, and how coverage is bound and terminated. These provisions are consistent nationwide.
The Four Parts of a Policy
A personal lines policy is built from four parts. The declarations page states the specific facts: named insured, covered property or vehicle, policy period, limits, premium, and forms attached. The insuring agreement states what the insurer promises to cover. The exclusions state what is not covered. The conditions set out the rules and duties both parties must follow, such as the insured's duties after a loss. Endorsements can add, delete, or modify any of these.
Key Conditions
Standard conditions govern how the policy works. Subrogation lets the insurer recover from the party responsible for a loss after paying the claim, and the insured must not impair that right. Duties after a loss include giving prompt notice, protecting property from further damage, and cooperating with the investigation. Appraisal offers a way to resolve disputes over the amount of a loss, and assigning the policy to someone else generally requires the insurer's consent.
Binding and Terminating Coverage
A binder provides temporary evidence of coverage, oral or written, until the formal policy is issued or the risk is declined. Coverage can end through cancellation (during the term, subject to notice rules) or nonrenewal (declining to continue at the end of the term). Insurers must generally give advance notice before canceling or nonrenewing, and the exact notice periods and permitted reasons are set by each state's law.