AN insurance policy offered by insurers usually contains the basic coverage. For instance, life insurance basically provides death benefits to the beneficiaries in case of death of the insured. Property insurance, on other hand, pays for the damage to property or other losses incurred from peril, such as fire or flood.

Given the varying degree of risks that people face everyday as well as the diverse preferences of the insuring public, insurance policy contracts are usually accompanied by the so-called “ancillary forms” such as riders, clauses, warranties or endorsements. These attachments essentially contain specific changes or modifications on the basic coverage to better match the risk level or preferences of the policyholders.

These attached documents are used to modify the standard policies by adding specific provisions to the original printed contract. Although these terms are used interchangeably in practice, strictly speaking, “riders” are used to adjust life insurance policies, while “endorsements” may contain alterations in property and liability insurance.

An endorsement is an attached written agreement which can add or subtract coverages in property or liability insurance. It may be attached at the commencement of the policy, or even when the term of the policy has begun. One example is an endorsement letter stating the transfer of ownership of an insured car. A terrorism exclusion endorsement is another, where any damage to property or losses arising from acts of terrorism will not be covered by the property insurance obtained.

Riders may be utilized to include or exclude coverage in a life insurance and may take precedence over the original policy provisions. An example would be a critical illness rider where the policyholder may receive a lump sum benefit, which may be equal to the face value of the insurance or a portion of it. Another example could be a total disability waiver, wherein the insurance company will take over the payment of the premium once the policyholder suffers a permanent disability which incapacitates him or her to work and earn a living.

These ancillary forms are not primarily part of the originally printed insurance policy, but becomes an integral part of the contract and will assume the same validity as long as these forms are attached to the insurance policy, the descriptive title or name of the rider, clause, warranty, or endorsement is mentioned and written on the blank spaces provided in the policy form, and are countersigned by the insured, if not applied for by the insured or owner.

It should be highlighted that when confusion, conflict or inconsistency arises with regard to the printed portions against the written portions of an insurance policy, the written portions should be followed.

Because it is basically a “contract of adhesion,” an insurance policy document is prepared and issued only by the insurer or the insurance company, and the potential policyholder or insured need only to affix his signature to perfect the contract. The latter usually cannot change the written policy prepared by the insurer. It is considered that the insured has agreed and consented to the contents of the insurance policy upon signing the document, and without expressing any contention or objection to what was written in it.

Therefore, it is very crucial for the insuring public to not to skip the reading part in the process of obtaining an insurance policy. However, the majority rule is that it is not considered negligence per se if an injured person did not read the contract first before accepting the enclosed terms and conditions and affixing his signature. Yet, scores of circumstances can always be used to prove the carelessness of a person who has the capacity to scan through the policy document but did not do so. For instance, a businessman obtained an insurance and signed the policy without reading the provisions. Based on his status and capacity and by affixing his signature, it has been assumed that he has read, understood, and agreed to the contents of such insurance policy. He cannot later claim that the policy is invalid because he had not fully read the document.

If the words and the language of a contract of insurance are clear and plain or readily understandable to a lay reader, there is no need to interpret it. Insurance contracts are considered private laws of the insurance company and the insured or policy owner. Thus, both parties must follow and comply with the terms of the insurance policy.

A person may go to court and seek for legal intervention only when the terms of the policy are ambiguous, equivocal, or uncertain. Given that an insurance policy is a contract of adhesion, any doubt should be resolved against the insurer, the one who prepared, drafted, printed, and issued the document. As the law states, the interpretation of obscure words or stipulations in contract shall not favor the party who caused the obscurity.

Life insurance riders

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