Common Policy Declarations

What Are Common Policy Declarations?

Common policy declarations are located in a separate section of a property or casualty insurance policy and contain all of the basic information that defines the policy. These declarations include the name of the insured, the amount of coverage, and the policy terms. The declarations also include the name, description, and location of the item or items being covered.

Understanding Common Policy Declarations

Common policy declarations are a basic part of every insurance contract. They include the dates on which coverage begins and ends, as well as the amount of premium required. The premium that insurance companies charge is based on the information found in the declaration.

Common policy declarations also provide instructions for policy cancellation and making changes in coverages. You will also find information on deductibles, policy limits, and assignment of the policy.

Both personal lines insurance and commercial lines insurance will include a policy declarations page at the beginning of the policy paperwork summarizing the basic information of the policy. Personal lines insurance covers individuals against loss and includes various kinds of insurance, such as homeowners, automobile, health, life, and disability insurance. A commercial lines policy protects businesses from loss. Examples of this include malpractice insurance, builder's risk insurance, and professional liability insurance.

Benefits of Common Policy Declarations

Common policy declarations are all placed on one or two pages at the beginning of the insurance policy. Frequently referred to as the declarations page, this portion of your insurance contract provides a convenient overview of your insurance coverage and conditions. The policy declarations page is necessary because insurance policies have multiple pages and reading through them to try to understand the basics of your insurance policy can be time-consuming and complicated.

The insurance declarations page simplifies everything by providing a basic overview of a policy. While the declarations page is not meant as a substitute for reading and understanding the entire insurance policy, it does clearly outline the policy's key features, along with the costs associated with the coverages listed on the page.

Special Considerations

It's important for policyholders to check their common policy declarations in order to spot mistakes, like a misspelled name or something more serious. For example, perhaps you asked for an all risks policy, but the insurance company issued you a named perils policy instead. This sort of mistake could pose a problem for you later if the mistake remains and you need to file a claim.

Common policy declarations should include everything a policyholder asked for or agreed to when accepting a new policy. It represents the benefits to which you're entitled. After making sure a policy is correct, it's important to keep the insurance declarations page in a safe place, as it is a key element of the insurance contract.

$652.8 Billion

The amount of property and casualty insurance premiums paid in the U.S. in 2020.

Examples of Common Policy Declarations

A common policy declarations page can be used by the insured to show proof of insurance. For example, when refinancing a home mortgage, it's standard practice for the lender to ask the borrower to provide a copy of the declarations page for the homeowner's insurance policy covering the home. The lender needs evidence that the home is adequately insured before agreeing to fund the new mortgage. Without this evidence, it's unlikely the lender would agree to the mortgage refinance. Rather than asking to review the entire policy, the lender will instead ask for the policy declarations page as this will include a summary of the pertinent information.

Additionally, the lender may require that the homeowner's insurance company issue a new policy declarations page at the time of the home refinance, frequently around the time of the loan closing. This new declarations page will list the lender as the mortgagee, along with the new loan number and lender's contact information.

Car loans are another example where a lender will ask for proof of insurance before finalizing a borrower's automobile loan. When buying a new or used car from a dealership, you'll need to provide proof of insurance before the dealer will allow you to take possession of the car. You'll need to show the dealer liability coverage that meets your state's requirements.