Although the policy is a document with a somewhat technical content, it is advisable to read it and, if necessary, ask for any clarification you may need. Often people are not really aware of the limits and coverage that exist in insurance policies, simply because they do not read this document carefully.
Every insurance policy must contain:
The general conditions reflect the set of basic principles established by the insurer to regulate all insurance contracts belonging to the same class or type.
In these conditions, regulations are usually established regarding the extent and purpose of the insurance, generally excluded risks, the way claims are settled, the payment of indemnities, payment of bills, communication between the insurer and the insured, jurisdiction, and so on.
These include more specific information such as the name and surname or company name of the parties, the insured item, the amount of the premiums, place and method of payment, etc.
These modify the general conditions, but in no case may they contradict the provisions of the Law, which apply to each user according to their specific characteristics. They must be accepted by the customer.
4. The term of the insurance policy
The term of the insurance policy refers to the period during which the guarantees are in force. The insurance takes effect from the moment indicated in the policy, for a given period of time (generally one year).
Example 1: a person is thinking of taking out home insurance during the first week of the year. If the term indicated in the insurance policy is from 00:00 am on January 15 and runs for one year, any loss occurring before that date will not be considered as covered.
The terms and conditions of the policy provide that, before the end of the period of coverage, the insurance may be automatically renewed for a new period, usually for another year. This renewal takes effect if the policyholder continues to pay the corresponding premium.
Example 2: in a home insurance policy whose term is from 00:00 am on January 15 of one year, and whose duration is annual, will a loss occurring on January 17 of the following year be considered as covered by the policy?
In this case, there is a so-called “grace period” by virtue of which the policyholder has one month from the expiration date of the policy to pay the corresponding premium. During this period the insurance remains in force as long as the policyholder pays the premium. Once this period has elapsed, the following consequences come into effect:
- Coverage by the insurer is suspended.
- For six months from the expiration date, the insurer may claim payment of the premium from the policyholder, and the contract is terminated if no such claim is made within this period.
In certain cases, both parties (insured and insurer) may terminate the insurance contract before the expiration date, and the coverage will be terminated. This situation is not frequent, but the insurer may make this decision in cases where there is an alteration of the risk, a false declaration of risk, or non-payment of premiums.