Policy Provisions, Options, and Riders
DICE frames every policy
Declarations (who, what, where, when, limits, deductible), Insuring agreement (the promise and the perils), Conditions (duties and rules), Exclusions (what is never covered). Endorsements and riders amend these parts; manuscript forms are negotiated.
Conditions that generate questions
Other insurance: pro rata, primary/excess, or non-contributory wording. A mortgage clause gives the lender notice of cancellation, the right to pay premium, and protection even if the insured's acts void the policy - a simple loss-payable clause does not. Duties after loss: prompt notice, protect the property, cooperate, submit a signed sworn proof of loss, submit to examination under oath. Appraisal settles the amount of loss; arbitration settles disputes by agreement. Salvage belongs to the insurer after payment. Liberalization extends the benefit of broader later forms. Pair and set reduces payment when part of a matched set is damaged.
Cancellation and nonrenewal
Flat cancellation returns all unearned premium, short-rate returns less than the exact unearned portion, pro rata returns it exactly. Nonpayment cancellation usually requires shorter notice than cancellation for other reasons, and assignment requires the insurer's written consent.
Traps
- Choosing appraisal when the fight is about whether coverage exists at all.
- Confusing a mortgage clause with a bare loss-payable clause.
- Assuming the deductible is paid once per policy term rather than per occurrence.
- Ignoring that a rider broadens coverage while an exclusion narrows it.
Worked example
Two policies with equal limits cover the same building and a $60,000 covered loss occurs. Absent excess wording, each insurer pays $30,000 pro rata.