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How to read an insurance policy

A policy isn't one document — it's a short personalised schedule bolted onto a long standard wording, and the two only make sense read together. Most people open the schedule, see a premium and a few numbers, and close it. Here's the order to read it in, and the jargon that actually decides whether a claim gets paid.

Start here: a policy is two documents

Almost every personal policy arrives as a pair. The schedule (also called a declaration page, policy summary, or certificate) is unique to you: who's insured, what's covered, the limits, the excess, the dates, the premium. The wording document — a PDS, policy wording, or certificate of insurance — is identical for every customer of that product and contains the definitions, conditions, exclusions and sub-limits that give the schedule's numbers their real meaning.

Reading only the schedule means reading a list of promises you don't yet know the conditions of. Reading only the wording means reading generic rules that your endorsements may have rewritten. The useful habit is to move between them: take one line from the schedule, find it in the wording, read what's attached to it.

The order to read it in

1. The schedule (5 minutes). Check the named insured, the address or vehicle, the policy period, and every sum insured and excess figure. Errors here — a wrong address, a misspelled name, an old vehicle — are the most common reason a claim gets argued about.
2. The endorsement list (5 minutes). This is the part people skip and the part that overrides everything else. Read it before the base wording, because it tells you what has been added or removed for you specifically.
3. Definitions (10 minutes). Not the whole section — just the terms that appear in your schedule: “sum insured”, “excess”, “replacement cost”, “ordinary course of use”. Insurers define these narrowly and their definition beats the dictionary one.
4. Exclusions and conditions (15 minutes). Exclusions say what won't be paid; conditions say what you must do — maintain the property, report a modification, keep a security device fitted. Break a condition and a loss can be refused even when it isn't excluded.
5. Sub-limits (5 minutes). Look for any category with its own cap inside the overall sum insured — jewellery, electronics, bicycles, cash, business equipment.

Decoding the jargon that decides payouts

These five terms appear in almost every policy and carry most of the money. Everything else in the wording is detail around them.

• Sum insured — the maximum payable for a covered loss. It's a cap, not a valuation. If it sits below the real cost of rebuilding or replacing, you fund the difference yourself, and an under-insurance clause can shrink the payout further.
• Excess / deductible — your share of every claim, subtracted before the insurer pays. The schedule shows a standard excess; the wording usually hides higher ones for specific situations (young drivers, storm, unapproved repairs, unsecured property).
• Endorsement / rider / extension — an amendment to the standard policy, either adding cover you paid for or carving out a risk you present. Endorsements take priority over base wording, so the same loss can be covered by the PDS and refused by your endorsement.
• Exclusion — a loss the policy will not cover at all, often by category (gradual deterioration, vermin, wear and tear, intentional acts, unoccupied property beyond a set number of days).
• Condition / warranty — an obligation on you. Unlike an exclusion, it's about conduct: fit an approved lock, service the boiler, disclose the garage conversion. Breach it and the insurer can decline a claim that would otherwise be squarely inside the cover.

What to look for on your own documents

• Every number on the schedule — write the sum insured and excess for each section next to a realistic worst-case cost. If you can't say what a figure covers, it hasn't been read yet.
• “Replacement cost” vs “actual cash value” — one word changes a payout by thousands, because ACV deducts depreciation from a 10-year-old roof or sofa.
• Any endorsement with a number in it — those are the ones that changed your limits or added a special excess.
• The unoccupancy clause — most home wordings cut or void cover once a property is empty for 30–60 consecutive days.
• Sub-limits and “not to exceed” wording — the sentence that quietly caps a category well below the headline sum insured.

The ten-minute version

Read the schedule, then the endorsement list, then hunt the wording for the five terms above. That's the whole exercise, and it's enough to catch the mistakes that cost real money: a sum insured that stopped tracking rebuild costs, a sub-limit you never noticed, a condition you didn't know you were breaking.

If you'd rather not do the cross-referencing by hand, the Policy Review tool reads both documents together and tells you which endorsements, conditions and sub-limits affect the covers you actually have.