Lesson 4: The Policy Documents

Unit 1: Definition of Policy Documents
The policy documents are made up of already Pre-Printed terms and conditions for the insurance contract. It shows the terms and conditions of the contract, the premium payable and the exclusions applicable. In the event of any disagreement between the insured and the insurance company, the policy document is used to interpret the contract. Thus, the policy document serves as the evidence of the contract between the insured and the insurance company.

Unit 2: Features of the Policy Document
The component parts of the policy documents may also be referred to as the constituent parts of the policy documents. They are:

a. The Heading
b. The preamble or Recital Clause:
c. Operative Clause
d. Exceptions
e. Conditions
f. Attestation Clause

(a) The Heading: The heading consists of the name of the insurance company, its head office address, the company’s website address and telephone lines.

(b) The preamble or Recital Clause: The recital clause states the parties to the insurance contract. It also refers to the proposal form, declaration and the payment of premium as the basis of the contract.

(c) Operative Clause: The operative clause will state the circumstances in which the insurance company is legally liable to pay the insured the sum insured. Thus, the operative clause contains the circumstances under which the payment of the sum insured would be made by the insurance company to the insured

(d) Exceptions: The exceptions to a policy are the various risks that are not covered in the ordinary course of the policy. They are the don’ts of the insurance policies and if a loss occurs as a result of any of them, the insurance company is not legally binding to honour the loss. The exceptions are sometimes referred to as the ‘Policy Exclusions’.

(e) Conditions: The conditions are the policy rules that govern the application and interpretation of the insurance contract as a whole.

(f) Attestation Clause: The attestation clause is the manner of execution of the policy documents.

End of Lesson for SS1 Insurance 2nd Term

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