An policy is a contract setting out the terms and conditions of insurance between an individual or company and an insurer.
The policy clearly details the situations covered by the insurance, the excluded risks, the sum insured, the conditions for claiming and other key details, such as claim procedures or specific exclusions.
Its main purpose is to provide certainty and clarity for both the insurer and the insured. It precisely sets out the rights and responsibilities of both parties, making it vital should an incident occur. For example, if you take out car insurance and have an accident, you should check your policy to see what is covered and what exclusions apply.
At a minimum, a policy must state the risks covered, the exclusions that apply, the premium payable and the period of cover.
