While it is common for insurance documents to be complicated due to the large number of legal and administrative details, they also are quite long and complicated. Also, when receiving a new documentation, there is a lot of paper involved, which can be very overwhelming. Fortunately, there is one part of the documentation that can serve as the key for the remainder of the documents: the declarations page.
The declarations page is also known as the “dec page”. The dec page is the most important part of the documents, since it acts as a snapshot of the coverage the client is receiving. It also outlines who is covered, what is covered, and the extent of the protection received. Overall, as a business owner, having knowledge of the declarations page is necessary to ensure the correct protection is in place before the need for a claim occurs.
What is a Declarations Page?
The declarations page is usually the first page within the insurance policy documentation. It acts as the summary of the contract, while the rest of the documentation lists all the details involved (including exclusions, and conditions). The rest of the documentation also involves the details that make it specific to the business receiving the paperwork.
This could be considered a quick reference tool outlining some specifics about your contract with your insurance provider. With existing Business Owners Policy (BOP), General Liability, or Commercial Property insurance, the declaration (dec) page is the primary document to use to validate that your insurance company made a contract with you for the coverage you requested.
Fundamental Parts of a Declarations Page
While formatting for each document may differ from company to company, most business insurance declarations cover the same information.
Policy Information and Named Insured
Starting from the top of the document, the Named Insured is the individual or entity, usually, the business that is protected by the coverage. This must match the business name legally. Also, if you have a DBA (Doing Business As) or subsidiaries, you want to be sure that they are mentioned or listed to guarantee coverage.
You will also see Policy Number, which is your unique billing and claims identifier, and Policy Period. This is a duration for which the insurance coverage is valid. It outlines the start and end date (s) of your coverage.
Coverage Options and Liability Limits
This section describes what potential risks are being covered and the amount the insurer will pay for covered losses. For example, in General Liability policies, you may encounter the following limits:
Each Occurrence: This means the maximum amount that will be paid in the event of one claim.
General Aggregate: This means the maximum amount paid for all the claims throughout the policy period.
Medical Expense Limit: This refers to coverage for medical costs for injuries sustained on your premises, irrespective of fault.
Business Liability Deductibles
This is where you will tell your insurer how much your business is willing to pay out of pocket before the insurer costs to cover the damages. Higher deductibles tend to result in lower premiums, and lower deductibles tend to result in higher premiums. This section will indicate your financial risks in the event of a claim.
Schedule of Locations or Items
For property or auto policies, the dec page will often include a ” schedule.” This is a list of the specific locations, buildings, vehicles, or equipment that are included in coverage. If your business has multiple locations, it is crucial to ensure that all addresses are included in this section.
Endorsements and Forms
Every insurance policy is built like a modular construction. The section labeled \\”forms\\” includes the name of the documents that construct your policy. \\”Endorsements\\” is the title for modifications to the policy coverage that add, delete, or change coverage. On the declarations page, there is often a sequence of numbers that looks like a random code. This code, however, is like a table of contents for the other documents in your policy packet.
Premium
Lastly, the declarations page includes the premium, which is the cost of your policy. This could be broken down by line of coverage (i.e., separate cost for the property and then for the liability) or shown as one total amount.
How to Read Your Declarations Page: A Step-by-Step Guide
You don’t need a law degree to understand a declarations page, but you do need to pay attention. Here are the steps you need to make to ensure your business is properly protected.
Step 1: Verify the \\”Who\\” and \\”When\\”
First, take a look at the Named Insured section. Is the business name accurate? Is the business mailing address up-to-date? Now, look at the dates. Does the effective date align with the coverage start date you need? This is especially important if you are closing on a loan or signing a lease.
Step 2: Align Limitations with Requirements
When a landlord, vendor, or client insurance is a must, check your dec page limits against their requirements. If your contract states there’s a requirement for liability coverage at the amount of $1 million, then make sure your “Each Occurrence” limit is at that amount or higher.
Step 3: Review Property Details
If there is property coverage, check the description of the premises. Is there an error in the square footage? What about construction type (e.g., masonry vs. frame)? These errors can impact the settlement of a claim.
Step 4: Review Endorsements
Go through the list of endorsements. Look for ones that are typically added like “Additional Insured” endorsements, extending coverage to third parties like landlords or clients. If you requested some coverage extensions, make sure they are included.
Tips for Understanding Your Coverage
Even with a clear declarations page, insurance can be tricky. Here are a few tips to keep in mind:
It’s not the Whole Story: The declaration pages are a summary, not the full contract. The page shows that you have liability coverage, but the policy form details what liability is and more importantly, what is excluded. Always refer to the wording in the policy for the details.
Keep An Eye On “Claims-Made” vs. “Occurrence”: On professional liability policies, see if the coverage is “claims-made.” This means coverage only applies if the policy is active at the time of the incident and at the time the claim is made. This is very important for future protection.
Don’t just stow your dec page away. Keep a copy on your phone or your computer. In an emergency, you may need your policy number and the instructions for how to report a claim; those are tools that are on the dec page, and they will help you to recover faster.
Your Business Insurance Is Important
Your business insurance dec page is more than just a piece of paper; it is the outline of how your business is protected financially. It is worth your time to look it over to find problems, learn what you need to do, and make sure your business is ready for the unexpected.
If, after reviewing your dec page, you see an error, or if you simply do not understand a certain limit or endorsement, just ask someone.
Your insurance broker or agent is the right person to help you understand your policy and to balance your coverage with your business aims.