An effective insurance policy transfers some elements of risk to a third party to protect your school’s long-term interests. But sometimes it helps to have a breakdown of how exactly to read an insurance policy to ensure it provides the protection you require.
Today we’re breaking down the key elements of a Directors and Officers policy, as it’s one of the most important insurance coverages a school can possess.
Table of contents. Most insurance policies start with this basic list, ensuring you know where to find the rest of the elements you’re looking for.
Declarations. This section answers many of the questions you should ask about your insurance policy. It often includes elements such as what the policy covers (in terms of people, buildings, vehicles, facilities, liability and negligence, disability, etc.), the stated coverage period, policy limits, and more. This section may include words such as policy period, insured persons, or loss that are further explained in the “definitions” section. A good tip to remember: When you’re reading one element in any contract or policy, and that section refers to another, go there immediately. Read the appropriate language so you can understand the full picture of what you’re agreeing to.
Insuring clause or agreement. This refers to who and what is covered. It also includes the types of situations or claims covered.
Definitions. This is where you’ll find the items referenced in other sections. Definitions are almost always required by law to be styled in bold and capital letters.
Exclusions. This spells out what is not covered.
Loss limits and coverage maximums. This includes any deductibles or retentions of loss that may exist.
Defense of a claim. This is often followed by “notice of claim.” Many policies will require the insured to notify the insurance company of any claim or incident that might reasonably lead to a claim within a certain time frame. If not done within the required time frame, coverage may be impacted and possibly voided altogether.
Coverage extension. Outlines additions to the coverages, such as others who may be included. You will find any broadening of coverage in this section.
General conditions. This includes how the policy can and may be canceled by you or the company.
Your insurance broker should help you walk through any policy and provide clarity where needed. But, in the end, this transaction is your office’s responsibility—you must know how to read and understand your policy.
Additional ISM Resources:
The Source for School Heads Vol. 16 No. 10 Questions You Must Ask When It Comes to Your Insurance Policy
Additional ISM resources for Gold members:
I&P Vol. 41 No. 4 Risk Management Assessment: Reduce Your School’s Exposure
I&P Vol. 35 No. 9 How to Scrutinize an Insurance Policy
I&P Vol. 41 No. 7 Selecting Your Insurance Broker
