An Overview

Summary: In journalism school, potential reporters are taught that every article they write should cover the five Ws: who, what, where, when, and why. One might think of an insurance policy's declarations page (or dec page) as indicating the who, what, where, when, and why of that particular policy. It is called the declarations page because it summarizes what the insured declares to the insurer to be the facts of a particular risk. In addition, the insurer declares what it will cover and the amount of coverage. The coverage part of most policies also makes various references to information contained on the declarations page.

This article offers a brief overview of the declarations page.

Topics covered:
The who
The what, where, when, and why
Policy references, commercial property policy
Personal auto policy
Business auto policy
Homeowners policy

The Who

A declarations page contains several different “whos.” The first and most obvious is the name of the insurance company. An insurance policy refers to the insurance company as “we.” The policy outlines what “we” will do in case of a covered loss. Along with the insurer's name are the name, address, and phone number of the agent/broker/producer.

Next is the named insured. Whether that's an individual, husband and wife, corporation, partnership, or limited liability company, the named insured (the person or entity to whom the policy is issued) is indicated prominently—usually directly below the name of the insurer and next to the name of the agent. An insurance policy refers to the named insured as “you.” It sets up certain coverages and responsibilities for the named insured (“you”). For example, the first use of the word “you” in a commercial property policy is in the description of covered property, that is, “personal property owned by you.” Then, the policy applies to “your business personal property.” The use of the word “your” emphasizes that it is the named insured's contents being covered—not those belonging to someone else. Within this category is “your” use interest in additions and alterations to the property—the named insured's use interest, not that of anyone else. The insured may have occasion to have the property of others in his care. If so, he may purchase coverage for personal property of others in his care, custody, or control.

The final “who” on the declarations page is a mortgagee(s). A company that borrows money to purchase office furniture cannot show that lender as a mortgagee because the lender does not have an interest in real property. This is important because the commercial property policy, in effect, establishes a separate contract with the mortgagee. The policy promises to pay any loss to the mortgagee regardless of the actions of the insured. In other words, if the insured burns down his own building, the insurer does not owe him but it does owe payment to any listed mortgagee. Even if the insured has not paid the premium, any loss is still payable to the mortgagee if it pays the premium and brings the account up to date. Thus, prior to listing any mortgagee on the declarations page, it is important to verify its status as a true mortgagee.

The What, Where, When, and Why

The declarations page tells what is insured—for example, on a commercial property form, it's a building, personal property, property of others, or some combination thereof. The dec page also tells what forms and endorsements apply, the coverages that apply, the limits of liability, and the deductible amount.

The where of a policy is straightforward. It is the location listed on the declarations. If there is more than one location, those are listed separately. On the line marked “policy period” the insurer indicates both the inception date and the expiration date.

The “why” of the dec page is that it provides necessary information about the insured and the insurer and the risk that is insured. As with any legal contract, the parties to the insurance policy (contract) and the purpose of the policy (contract) have to be identified in order to have legal effect. The dec page serves this purpose.

Policy References, Commercial Property Policy

The commercial property policy refers the reader to the declarations page on several different occasions. The first is in the insuring agreement for building coverage. The insurer promises to cover the property described if a limit of liability is shown on the declarations for that type of property. Thus, if a business owner suffers fire damage to his building and his inventory, but the policy indicates only building coverage, he will not be covered for the loss of his contents. In addition, for a building or personal property to be covered, the building must be described on the declarations and the personal property must be located in or on that building (with the acknowledgement that the commercial property policy does offer some off-premises coverages). The personal property of others is also covered only when in or on the building shown in the declarations.

The causes of loss form chosen by the insured is also shown on the declarations. For example, if the insured wants open perils coverage (all risk), the causes of loss—special form, CP 10 30 09 17, has to be shown on the dec page.

The limit of liability section makes it clear that the insurer will pay no more for loss or damage in any one occurrence to any category of property than the amount shown on the declarations.

The final place on the commercial property policy that refers to the declarations is the description of optional coverages. If any of these are shown as applicable on the declarations page, they apply:

1.Agreed value.

2.Inflation guard.

3.Replacement cost.

4.Replacement cost for the property of others.

Personal Auto Policy

As a different example of the “what” on an insurance policy, the PAP dec page shows the vehicles to be insured. It includes a full description—year, make, model, VIN, physical damage rating symbol, and classification. It indicates the applicable coverages, limits of liability applying, and the deductibles that apply for cars with physical damage coverage. It will also indicate if the vehicle is garaged at a different location; if a child is away at school with a vehicle, the location of the school needs to be shown as the garaging address of the vehicle with the student.

The PAP also refers to the declarations page throughout the body of the policy as shown in the following examples:

1.The policy covers “any vehicle shown in the declarations” as the named insured's covered auto.

2.The policy provides newly acquired autos with the broadest coverage “for any vehicle shown in the declarations.”

3.If a new car substitutes for a car shown in the declarations, that new car will have the same coverage as the one being replaced.

4.Additional cars get fourteen days automatic physical damage coverage if physical damage coverage is currently shown in the declarations; four days if such coverage is not indicated.

5.The policy specifies that the bodily injury and property damage limits “shown in the declarations” are the most it will pay for injuries or damages arising out of any one accident.

6.Any physical damage deductible is shown in the declarations.

7.Transportation expenses are payable if physical damage coverage is shown in the declarations.

Business Auto Policy

The BAP tells the reader that item two on the declarations describes the autos that are considered as covered autos. This is done by using symbols. While a PAP symbol is used to rate the physical damage coverage, the symbol on a BAP describes the types of vehicles to be covered by that particular policy. These symbols are entered next to a coverage on the declarations page to indicate what type of autos is covered for specific types of coverages. For example, the use of symbol 1 on the declarations page next to the liability coverage means that any auto is considered a covered auto for liability purposes. The use of symbol 7 next to the physical damage collision coverage means that specifically described autos have collision coverage. The insured must enter the desired symbol on the declarations page to make sure that the appropriate auto is given the desired coverage.

The BAP refers to the declarations when describing the types of coverage that will be provided to newly acquired autos. In addition, it specifies that the bodily injury and property damage limits shown in the declarations are the most it will pay for injuries or damages arising out of any one accident.

Homeowners Policy

Like the other policies, the homeowners declarations page contains the who, what, where, when, and why of the policy. It lists the location of the property to be insured, the limits and coverages, including liability limits. The mortgagee is also an insured. The bank will require that the property have insurance in order to approve the loan. Like the commercial policy, if for some reason the insured's claim is denied, the carrier still owes the mortgagee for the loss. The mortgagee has certain duties listed in the policy, such as paying the premium, in order to receive payment.

Homeowners policies provide coverage for the dwelling, other structures such as detached garages or sheds, personal property of the insured such a furniture, clothing, and other property, and liability coverage for acts of the insured that cause injury or damage to others.

The policy automatically covers property of others while the property is on the part of the “residence premises” occupied by an “insured”, or property of a guest or “residence employee” if the property is in any residence occupied by an “insured”. If Aunt Mabel is visiting for 3 weeks and the insured has a fire and Aunt Mabel's belongings are damaged or destroyed by the fire, the insured can simply request that her property be covered an the carrier will provide coverage according to the policy language. Tenant and condominium declarations are similar with the same information.

This is just a general discussion of declaration pages and how they work. As you can see, regardless of line of business, the same type of information is provided. Who is the insured, who is the insurance carrier, the address of the insured and the address of the insured property if the two are different, limits of coverage for property coverages and liability coverages, optional endorsements that may have been added, deductibles, and effective date of the policy.