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Insuring Clause

What Does Insuring Clause Mean?

The insuring clause is an integral part of any insurance contract and one that all insureds should pay close attention to. The insuring clause is the section of an insurance policy that outlines the risks assumed by the insurer. In other words, this clause details exactly the risks the insurer is liable for paying and defines the scope of the coverage.

Although it is called an insuring clause, it is actually more likely a collection of clauses for all the different perils, losses, and additional coverage an insurer is offering you in the insurance policy. For example, on a typical home insurance policy, your insurance clauses might state that you have coverage for:

  • Dwelling Building.

  • Detached Private Structures.

  • Personal Property.

  • 3rd Party Liability.

  • Defense Costs & the Right and Duty of the Insurer (to defend you from liability claims)

When you receive a copy of your policy wordings from your insurance company, you should make sure you understand the insuring clause(s) to grasp what is and is not covered by your policy and for how much.

If you have questions about any of the terms contained within, you should contact your insurance provider for clarification. The last thing you want is to find out you do not have coverage for something when you have a claim because by then, it is too late.

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Insuranceopedia Explains Insuring Clause

The insuring clause(s) are one of the most critical components of an insurance contract and forms its foundation. It outlines the major guarantees and protections offered by the insurance company and states what is covered. That is why it is so critical for you to understand this part of the policy and to communicate with your insurance provider for clarity if there are any areas you are unsure about.

Put another way, this clause outlines the role the insurance company has agreed to perform as part of the contract. Examples include paying for certain losses arising from insured risks, providing certain agreed-upon services, providing defense for a lawsuit subject to certain conditions, and other agreements that form part of the insurance policy protections you are paying for.

For example, in a life insurance policy, the insuring clause states the main purpose of paying out a specific amount in a death benefit to the named beneficiary after the death of the insured.

In this context, it would include the insurer’s name, the face value payable, and the insured’s name. In more complex policies, the insuring clause(s) section might also include information on the causes of death that are accepted and any limitations (if any) that might apply under different scenarios.

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