An insurance policy is a contract or agreement between you (the insured) and an insurance company.
The contract is made up of two main documents. One is the policy declaration which contains your information, i.e. name, address, etc., the premium you paid and the plans or coverage you purchased.
The other document is the policy wording. It contains the rules of the insurance agreement: details of how, when, under what conditions, etc. the benefits and services will be provided.
There are four important things to look for in the policy wording : Benefits, exclusions, terms&conditions and definitions. Think about them as parts that work together rather then independently when analyzing the specific event that leads to a claim.
They explain what is specifically covered by your insurance policy. It is what you get in exchange for paying the premium and subscribing to the insurance contract. In the description of each benefit you can find the detail of amounts and services rendered in each case. Travel Insurance benefits usually include emergency medical costs (hospital, doctor’s fees, ambulance, etc.); travel expenses for cancelled or interrupted trips; baggage loss; compensation in the event of death, etc. Each depending on the plan you purchase.
They refer to people, things, circumstances or situations that are excluded from coverage. They are clearly mentioned as such and you will find them under specific sections and subtitles in the policy wording.
There are two kinds of exclusions: exclusions specific to the plan you purchased, e.g. emergency medical, trip cancellation/interruption, etc., and the General Exclusions that apply to all the plans. Be sure to read all the General Exclusions and the ones specific to your plan in the policy wording.
Here are some examples:
- Person: A baby born during a covered trip is excluded from the coverage, while the mother is still covered.
- Things: Prescription glasses or sunglasses, electronics, documents, jewelry, etc., are excluded from coverage under Baggage Optional Coverage.
- Circumstances: Treatment or services received in a rehabilitation clinic, SPA or convalescence center.
The terms and conditions
They describe the rules that apply to the insurance contract. They are legally binding and non-negotiable so you can only either agree or disagree with them. If you don’t agree withe the terms&conditions you cannot proceed with your purchase. It is your responsibility to be aware of the terms&conditions you must abide by.
Some terms&conditions statements that are part of the insurance agreement are related to medical information you will have to provide if required; being aware that some exclusions may apply and confirming that you are in good health at the time of purchase.
They are key to understanding the benefits, term&conditions and exclusions. Every time you see a word in italics in the policy wording it means that there is a special definition for it.
Words like “emergency”, “acute” or “physician”, among others, are defined by the insurance company in a very specific way that might not be at all what you think it is.
Tip! If a word has been specifically defined in the policy wording, it is that definition and none other the one that counts. Not your’s, not your doctor’s…