Insuring Agreement

Example

“The insuring agreement in David's liability policy states that the company will pay damages he becomes legally obligated to pay due to bodily injury caused by an occurrence during the policy period.”

Memory Tip

Think 'The Insurance Promise' - this agreement is where the insurer makes their binding promise about what they'll cover for you.

Why It Matters

The insuring agreement determines whether your claim will be paid or denied, making it the most important part of your policy to understand. Misunderstanding this section can lead to expensive surprises when you think you're covered but actually aren't, potentially costing thousands in unexpected expenses.

Common Misconception

Many people think the insuring agreement covers everything unless specifically excluded, but it actually only covers what's specifically promised in that section. Another misconception is that insuring agreements are written in plain English, when they often use precise legal language that requires careful interpretation.

In Practice

Robert's homeowner's insuring agreement promises to pay for direct physical loss to covered property caused by covered perils, subject to a $2,500 deductible. When a tree falls and causes $15,000 damage to his roof during a windstorm, the insurer pays $12,500 ($15,000 minus the deductible) because wind is a covered peril and the damage meets the 'direct physical loss' requirement outlined in the insuring agreement.

Etymology

Combines 'insuring' from Latin 'securus' (secure) and 'agreement' from Old French 'agreer' (to please or accept), representing the mutual understanding of what security is provided.

Common Misspellings

Related Terms

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Other insurance terms you should know

See Also