“You got it buddy, the large print giveth and the small print taketh away”
In the nearly 30 years I’ve been a theatre insurance broker I’ve read many Theatre Insurance Policies. Over those years I’ve adopted an approach to help me determine what’s covered-and what’s not, relatively quickly.
In today’s Post, I thought I would share these very simple tips with you. They will make you feel more comfortable with the policy you are buying and help you form better questions when discussing the coverage with your broker or dealing with a claim.
Before we begin, it’s important to know here are 4 essential parts of any Theatre Insurance Policy. For the purpose of this discussion, I will be referring to a ‘Broad Form” type of policy (often referred to an ‘All Risks’ policy; a terrible name by the way, as I’ve yet to see a policy that covers everything!) This type of policy has become the most common in the industry and is generally considered a broader form of coverage than a ‘Specified or Named Perils’ policy. Broad Form policies outline what type of claims you will NOT be insured against; whereas, a Specified Perils policy outlines the types of claims which are insured by the policy.
So here we go:
- Start with the Insuring Agreement: it’s here that the insurance company tells you what they are insuring. These are generally short and you will see certain words identified with italics, or bold or capitalized letters; policies will use this as a way of telling the reader that these words have a broader meaning which are defined elsewhere in the policy, usually under a section titled Definitions;
- Move on to the Definitions: Definitions broaden a single word or words beyond the common-use meaning, to define what it means in your policy. For example, the word ‘Insured’, may be broadened to include your corporation, employees, officers, volunteers, shareholders, etc. Using Definitions makes reading the policy less repetitive and easier to read. Sometimes a definition will also tell what it doesn’t mean, so watch that.
- Now, read the Exclusions: It is here where your coverage is shaped and the insurance company tells you what will NOT be covered by your policy. Some insurance companies have this under a section referred to as ‘What’s Not Covered’, or ‘Causes of Loss Not Covered’. Often I’m asked the question, “So what are we covered for?” While this is a great question, to me it’s more important to know what you are NOT covered for as it there where the surprises live. This is why I read the Exclusions. Sometimes you will find there are exclusions specific to certain sections of your policy, and then there are some known as General Exclusions which apply to your ENTIRE policy. If you see an exclusion that you don’t like or you feel it too greatly restricts your coverage, be sure to raise this with your broker. Some exclusions can be removed by paying an additional premium for the added coverage.
- And finally, look for ‘Endorsements’: these are used by insurance companies to modify their standard policies. They can broaden or restrict your coverage. They can usually be found listed in the front section of your policy known as your ‘Policy Declarations’.These are the front sheets on your policy where the insurance company lists your insured amounts, deductibles and premiums.
There will be other parts of the policy called Statutory Conditions and General Conditions. While these are important, they are generally common to most policies and can be read once you have tackled the parts I’ve listed above.
And one final tip: when it comes to making a claim under a Broad Form policy, it is your insurance company that has the responsibility to establish that one of the exclusions applies to your claim. Any ambiguity will be read in your favour as they were the ones who created the policy wording. By contrast a Named or Specified Perils policy requires YOU to demonstrate that your claim has resulted from one of the insured loss types specified in your policy.
By using these 4 simple tips you will quickly be able to understand your policy, feel more comfortable with it, and be able to ask questions that may help broaden your insurance protection.