Meaning of insurance policy

Insurance policy is a contract or agreement between the insurer and the policyholder. The contract is of such a nature that it spells out the rights and obligations of the parties to the insurance contract. That is to say, it determines the claims which the policyholder or his beneficiaries or third parties can make. And as well as which the insurance company shall pay upon the occurrence of the risks insured against. This refers to as the fortuity principle because the happening of the event must be uncertain as to when, where and how the event will happen or if it will happen at all.

Similarly, it is important to note that it is the payment of the insurance premium that crystallizes the contract. That is to say that without the insurance premium, there can be no insurance contract . Thus, upon the payment of the premium, the insurer promises to pay for loss or risks that enjoy coverage under the policy.

By the nature of insurance contracts, it is in such a way that it is to meet specific needs. And as such, possesses certain many features not present in other types of contract. Thus,  they are always on paper forms. This means that it includes all forms with links to the agreement between the policyholder and the insurance company.

However, additional writings such as correspondences after the final agreement can make the insurance policy a non-integrate contract. As a matter of fact, courts most times consider all pre- negotiations or agreements as well as the contractual terms in the policy at the time of execution. And also afterwards as the policy riders and endorsements with both parties’ consent as part of the written policy.


There are certain attributes that makes an insurance policy and some of these features include;

  1. Your insurance policy number
  2. How long your coverage is
  3. The price of your coverage- the premium
  4. What enjoys insurance coverage
  5. Your deductible
  6. Definitions of insurance terms
  7. What does not enjoy coverage under your policy

Insurance policy number

This is the unique identification number differentiating one policy from another. This is always in the insurance card of each policyholder. It can also be found in the online insurance mobile app or portal.

How long you are covered for

This is the duration of your coverage. Every insurance policy must contain the duration the policy is to last. For example, 10 years, five years or for a life time depending on your agreement with the insurance company.

The price of your coverage- the premium

This is the amount of money you pay for the insurance contract. It is called the insurance premium. It is usually paid periodically by the policyholder to the insurer for covering the risks.

What is covered

This is the statement of what your policy covers and what it does not cover. In order words, it is the list of risks the insurance company has undertaken to cover and the things to which the risks attach.

The deductible

This is the amount of money the policyholder is liable to pay towards redeeming an insured loss.

Definition of insurance terms

This is the meaning attached to specific insurance term used in the policy.

What is not covered

This deals with the losses that your insurance policy does not cover.



This is the part that identifies who is an policyholder, the address, the insuring company, what risks or property enjoys insurance coverage, the policy limits or amount of insurance, deductibles, the policy number, the policy period, and as well as the amount of the premium.

Definitions of terms in an insurance policy

This is the meanings attached to the terms used in the insurance policy

Insuring agreement

This is the part of the policy that defines the risks that enjoys coverage under the policy, or nature of coverage. This is where the insurance company makes one or more express promises to indemnify the policyholder in the happening of a certain insured event.


This has to do with exclusion terms describing property, perils, hazards or losses arising from specific causes which do not enjoy coverage.


These are the conditions in an insurance policy means those specific provisions, rules of conduct, duties, and obligations that the policyholder must comply with in order for coverage to be effectual.

Policy form

This is the combination of the definitions, insuring agreement, exclusions, and conditions. This is the document called a policy form. Most often, some insurers call it a coverage form or coverage part.

Endorsements in an insurance policy

These endorsements are the additional forms which are attached to the policy. They modify it in some way, either unconditionally or upon the existence of some condition.


An insurance rider is an additional term to the insurance policy. It is an addendum to the original terms or to the terms of the policy.

4 thoughts on “INSURANCE POLICY

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