When it comes to insurance policies, the insuring agreement is the heart of the policy. This is the section that outlines what the insurer is agreeing to cover and what the policyholder is agreeing to pay for that coverage. In other words, it’s the meat and potatoes of the policy.

If you’re new to insurance, understanding the insuring agreement can be difficult. But don’t worry – we’re here to help. In this article, we’ll give you an example of an insuring agreement and break it down so you can better understand how it works.

Example of an Insuring Agreement

Let’s say that you’re a small business owner who is looking to purchase a general liability insurance policy. The insuring agreement for that policy might look something like this:

“The insurer agrees to pay damages on behalf of the insured for bodily injury or property damage caused by an occurrence, subject to the limitations and conditions set forth in this policy.”

Now, let’s break this down.

“The insurer agrees to pay damages on behalf of the insured” – This means that if someone files a lawsuit against you or your business claiming that they were injured or that their property was damaged as a result of your actions, the insurer will pay for any damages awarded to that person, up to the limit of your policy.

“For bodily injury or property damage caused by an occurrence” – This means that the policy only covers damages resulting from accidents that occur during the policy period. For example, if someone trips and falls in your store two weeks before your policy starts, your policy won’t cover any damages resulting from that incident.

“Subject to the limitations and conditions set forth in this policy” – This means that there are certain limitations and conditions that apply to your policy, such as policy limits, deductibles, and exclusions. These will be listed elsewhere in the policy and should be carefully reviewed before purchasing the policy.

Final Thoughts

Understanding the insuring agreement is key to understanding your insurance policy. It’s important to read this section carefully and make sure you understand what is and isn’t covered under your policy. If you have any questions, don’t hesitate to ask your insurance agent or broker for clarification.