Insurance Polices - Know your limits
Published 01/18/07

 An insurance policy is a contract between the insurance company and the insured. Under this contract, an insurance carrier will agree to pay money to the insured in the event of a covered loss. A covered loss is a loss that the insurance carrier has agreed to protect the insured against in the event of its occurrence.

For example, in an automobile policy there are many "covered losses" that the insurance policy may protect against. For example, if there is a line of coverage known as "collision coverage," the insurance carrier will pay to repair the damage done to your vehicle in the event it is involved in an accident. Automobile policies may also carry coverage known as medical payments. This coverage will reimburse a passenger or driver of the vehicle for medical bills they have incurred if they are injured in an accident.

There are two very important things to remember when reading an insurance policy. The first is to clearly identify what covered losses are part of the policy. Remember, an insurance carrier has no obligation to provide coverage for a loss that is not covered. One of the most frequently excluded areas are claims that allege an intentional act.

For example, an insured owns a homeowners insurance policy. The insured gets into a fight with a visitor and injures the person. The visitor brings a lawsuit against the homeowner claiming he intentionally injured the visitor. If the insurance policy has exclusion for intentional acts, there will be no coverage for this loss.

The second area that must be read carefully is the limit of coverage. The limit of coverage is the maximum dollar amount the insurance carrier will pay in the event of a loss. For example, an automobile insurance policy may have medical payments coverage of $1,000.00. This means the insurance policy will pay up to $1,000.00 for medical bills sustained by a driver or passenger in the event of an accident.

There is no obligation to pay for medical bills beyond the $1,000.00 limit. You may also see in an automobile policy a section for liability coverage that reads, for example, $100,000.00/$300,000.00. This means that the event the insured causes an accident, the insurance carrier will pay $100,000.00 for each injured person or $300,000.00 maximum for that accident, whichever is less.

As stated above, insurance policies are contracts. When a person purchases an insurance policy they are assumed to have at least read the policy on a "more than casual basis". Merely because the insured was unaware that a term or condition was part of the policy or failed to read that term or provision, will not invalidate it.

If you have any doubts as to the scope of coverage or limits of coverage of any insurance policy that you own, you should speak with an insurance professional or an attorney.

Andrew J. Piela is an associate attorney at Hamblett & Kerrigan, P.A. His legal practice includes civil litigation, family law, land use litigation and probate. You can reach Attorney Piela by e-mail at: apiela@hamker.com

This information is general information and may not reflect the most current legal developments, verdicts or settlements. The information provided should not be relied upon as an indication of the actual state of the law or of future developments. The information contained on the Hamblett & Kerrigan website is for informational purposes only and does not constitute legal advice. If the information referenced may be of legal importance to you, you should consult with an attorney to provide you with legal guidance and opinion as the the effect of the current law upon your situation.