How to Read Insurance Policy Terms Like a Broker
- Guntis Zoldners
- Feb 17
- 3 min read
Insurance brokers work with policies and their terms every day. Not because they are unfamiliar with them, but because every client is unique – with specific needs, risks, and questions.
A broker must understand not only what is included or excluded in a policy, but also what actions are required when a loss has already occurred.
How do they navigate these complex documents so efficiently? And is it possible to learn to read policy terms with similar precision? Yes – if you know where to look.
How do Brokers Read Insurance Policy Terms?
1. Brokers Usually Don’t Read Everything from Start to Finish
Although each insurer drafts their own wording, the overall structure of policy terms is generally similar. Instead of reading all 20+ pages line by line, a broker knows exactly where to find specific information.
Key sections to look for:
Insured risks
Exclusions (“what is not covered”)
Actions required after a loss
Claims notification procedure
Most policy documents include a table of contents – use it. The search function (Ctrl + F) is also useful, but only if you know the right keywords: “deductible,” “limit,” “policyholder obligations,” “exclusions,” “risks,” etc.
2. The Trickiest Part – Cross-References to Other Clauses
One of the biggest challenges when reading insurance terms is cross-references. You read one sentence, and then you are directed to another clause elsewhere in the document to understand the full meaning.
Sometimes a single sentence needs to be read three times to grasp its legal significance.
This structure is not a mistake – it reflects the logic of legal drafting. However, it is precisely for this reason that clients often miss important nuances.
3. Can AI (Such as ChatGPT) Help?
Yes. If you upload the policy wording and ask clearly formulated questions, artificial intelligence can help you understand the general structure or locate specific information. However, it is important to remember – AI is not a lawyer. Without proper understanding of context or terminology, incorrect conclusions are possible.
Tip: AI can be a useful supplementary tool, but not the primary source of advice when legal or financial responsibility is involved.
4. Simpler Language Does Not Mean Simpler Terms
After the Jelgava flood case, the Bank of Latvia required insurers to rewrite policy terms in simpler language. The result? In some cases, the documents became even longer.
Additional explanations and examples were added, but the legal substance remained unchanged. This means they may be easier to read – but not always easier to truly understand.
What Do Brokers Recommend?
If you want to review your policies yourself:
Use the table of contents
Search for relevant keywords
Focus on exclusions and claims conditions
If in doubt – consult a broker
Do You Need to Understand Everything Yourself?
No. That is exactly why insurance brokers exist. The Perks team works daily with policy terms from different insurers – we know the differences, identify gaps, and understand where problems may arise before they turn into financial losses.
If you want to make sure your current insurance actually does what it should – protect your company from unexpected expenses – apply for a free policy audit.
Key points - How to Read Insurance Policy Terms Like a Broker
There is no secret formula or magic method - the main thing is to know what to look for and where to find it.
Start with the most important: what risks are covered, what is excluded, what is the deductible, what is the limit and how to claim compensation.
Often the most important information is hidden in the references between different points - they can change the entire understanding of the coverage.
AI tools can help you navigate, but they are no substitute for experience - legal nuances are best understood by a person who works with them every day.
Simply written rules do not mean that they have become simple - sometimes they just become longer, not clearer.
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