Policy
A written contract between you and an insurance company that spells out exactly what is covered, what is excluded, how much you pay in premiums, your deductible amounts, coverage limits, and the conditions under which claims will be paid.
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Example
“I read through my entire homeowners policy and discovered that flood damage was not included.”
Memory Tip
Your policy is your insurance rulebook. Every right, responsibility, and restriction is written in it.
Why It Matters
Your policy is a legally binding contract. Understanding its terms prevents claim denials and coverage gaps.
Common Misconception
Most people never read their policy and are surprised by exclusions when they file their first claim.
In Practice
Read at least the declarations page, coverage summary, and exclusions section of every policy you buy.
Etymology
From Old French police, meaning contract or certificate.
Common Misspellings
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