States have been given the authority to regulate insurance company practices including the types of property insurance policies that can be offered to homeowners in their respective states.
Individual states through their Department of Insurance, work together to regulate insurance products in an attempt to protect homeowners from unfair and illegal insurance and claims practices. To understand how insurance policies operate, we need to first understand the basic parts of a home insurance policy.
Most home casualty insurance policies contain four separate and distinct parts: the declaration page, the list of conditions, the insuring agreement and the companies stated exclusions. Each is briefly explained below.
Policy Declarations
Also known as the declarations page of the policy, it provides the homeowner with a summary of basic information such as the identity of the insured and the insurer, the nature and scope of the risks covered, the relevant policy limits, and the stated dates of effective coverage. The declaration page can also contain a list of amendments and endorsements, which identifies the version of the insurance policy in use and related provisions that are in effect.
Policy Conditions
In home smoke and fire policies, there are a number of express written conditions, which require homeowners to perform certain tasks and assume specific responsibilities during the investigation and preparation of the smoke and fire claim.
The policy conditions require the homeowner to do certain things to activate coverage and payment of the claim. For example, many homeowner policies contain conditions that limit the filing of an insureds lawsuit against the carrier to within one after the claim has been formally submitted or denied.
Insurance definitions can also operate as conditions that must be carefully interpreted. Absent a specific definition in a homeowner’s policy, undefined words will usually be given their plain and ordinary meaning with respect to judicial interpretation of the policy.
Insuring Agreements
This is the part of the homeowner’s policy that expressly states exactly what the insurance company has agreed to cover and to what extent. For example, in fire and smoke policies, the insurance company will agree to insure the homes structure as well as its contents, up to a specific dollar amount.
Policy Exclusions
While the “insuring agreement” discussed above confer coverage to the insured, policy exclusions do the opposite, it denies coverage under certain conditions. For example, in a fire, smoke and ash loss, the insurance policy may provide for coverage of the homeowners property including damage to the homeowners pool. However, a small man-made pond on the insureds property may fall under a policy exclusion, which denies coverage on the claimed item.
The Battle of Interpretation In Fire And Smoke Insurance Policies
Since insurance companies enjoy a distinct advantage in having drafted the insurance policy, where there is ambiguity in the policies language or terms of use, the courts are mandated by statute to strictly interpret insurance policy exclusionary clauses against the insurer and in favor of the insured.
Insurance policies have long been considered one-sided contracts. A homeowner wanting to buy an insurance policy cannot negotiate the terms of the insurance policy with the company sales agent – instead the insurance policy is presented to homeowner as a take it or leave it proposition. This discrepancy in the bargaining position between the seller of insurance and the buyer of insurance, has led to added protections for consumers of home and casualty insurance products.
For more on local fire, smoke and ash residential insurance policies and claims, local property and casualty lawyers, station fire claims, adjusters and discount legal services go to
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