Getting insurance for your home, automobile, or a rented property can protect you and your family in life-threatening scenarios. While signing up with a reliable insurer is important, it’s also crucial that you read and understand your insurance policy contract thoroughly to reap its benefits.
You may reach out to your insurance advisor if you don’t’ understand a clause or a statement in your contract. However, the trickier terms might make it difficult for you to comprehend the details. Therefore, continue reading this blog as we help you understand the basic principles in every insurance contract.
Insurance Contract Essentials
Every insurance contract consists of the following components that you need to understand:
- Offer and acceptance – the first thing you need to do when applying for insurance is to get the policy form from a reliable insurance service provider. Fill in the requested details and submit the form to your insurer. This is known as your offer. The insurance company will opt for an underwriting process, if necessary, and agree to provide you with insurance. This is called acceptance. Your insurer might make a few changes to your offered proposal before accepting it.
- Consideration –you’ll have to pay a premium in this step to your insurance company. Thus, consideration is the money your insurer will have to pay you should you claim your insurance.
- Legal Capacity – you can only avail an insurance policy if you’re legally competent. If you’re mentally ill or a minor, you will be disqualified from signing a contract. On the other hand, insurers are considered competent when licensed under the existing state regulations.
Every insurance contract specifies what the company will pay you for an eligible claim and how much you’ll be obliged to pay for a deductible. In this context, insurance contracts that can measure your losses in terms of money are known as indemnity contracts. The purpose of indemnity contracts is to provide you with some financial stability following an insurance claim.
On the other hand, non-indemnity contracts offer you benefits for things that can’t be priced—for example, life insurance or disability insurance. Since no insurer can calculate your life’s net worth or put a fixed price on it, they will include policy terms and definitions in your contract to meet your needs.
To learn more about insurance policies, reach out to us at San Angelo Insurance and Fast Tax. Our team is highly skilled and will guide you step-by-step through our insurance policies. Contact us today if you’re looking for life insurance coverage in San Angelo.