Updated: 11 March 2024

What Does Clause Mean?

Clause means the financial responsibility of the insurance company to the policyholder as stipulated in the contract. It states what loss it is going to cover. The policyholder can ask for a specific clause to be covered while the insurance company, or its representative, drafts the policy.

Insuranceopedia Explains Clause

It is important that the insured understands the insurance contract that they purchased because it entails what they are going to get out of it in the future. They must pay attention to the clause or clauses in the contract. It is also important for them to know all the possible clauses that they can insert into a contract.

When buying property insurance, for instance, they must be aware of the potential calamities that can damage the property. Most insurance companies do not include earthquake as a peril.The purchaser of the policy might want to add an earthquake clause for the property to be covered if this particular peril does damage to their property.

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