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Personal Property and Casualty Insurance – Part 2 of 2

Uniform Policy Forms – The Insurance Services Office (ISO) and the American Association of Insurance Services (AAIS) are industry service organizations that provide actuarial and loss information to P&C insurers. These service organizations also provide standardized, uniform policy agreements, called ‘forms’ which are used by many insurers. ˡ Such standardized policy forms make it easier for a consumer to understand the terms of the policy and to compare policies offered by different insurance firms.

Understand the Contract – An insurance policy is a written contract between the insured and the insurance company. The protection provided by P&C policies of all types typically represents a significant part of an individual’s overall risk management program. Thus, it’s important for an insured individual to read and understand key policy provisions, such as:

• What perils (or risks) are covered in the policy? In the “named-peril” form, the policy will specify only those perils that are covered. In the “all-risk” form, the policy will list only those perils that are not covered and provide protection for all others.
• What perils are not covered? In many cases, perils that are excluded can be covered by endorsement and payment of an additional premium.
• What are policy limits? What is the maximum benefit/coverage payable by the insurance company in the event of a loss? Is a home that would cost $200,000 to rebuild insured for $100,000?
• What are the deductible amounts? A policy deductible is the “self-insurance” element in an insurance policy; the term refers to the part of the loss the policy buyer must pay before the insurance company pays its portion.
• Impact of inflation: A home built 20 years ago can be rebuilt, but at a much higher cost. Most policy forms provide for replacement cost of a home and contents, along with an annual inflation guard of between 2% and 6%.
• In the event of a loss, what are the duties of the insured? Each policy will specify certain actions that an insured must take in the event of a loss.

Julie Ngo is a State Farm Insurance Agent located at 28410 Old Town Front Street in Temecula. She can be reached at (951) 695-2625.

ˡ Some insurers have their own forms which may differ from the standard contracts developed by ISO or AAIS.

Written by Julie Ngo

Julie Ngo is a State Farm Insurance Agent located at 28410 Old Town Front Street in Temecula. She can be reached at (951) 695-2625.

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