What is the purpose of an insurance policy's "terms and conditions"?

The purpose of an insurance policy's "terms and conditions" is to clearly outline the rights and responsibilities of both the insurer and the insured. This section is crucial because it establishes the framework within which the insurance contract operates. It details what is covered under the policy, the obligations of both parties, the exclusions, conditions for making a claim, and the procedures to follow in case of a loss. By articulating these elements, the terms and conditions help prevent misunderstandings between the insurer and the insured, contributing to a smooth claims process and ensuring that both parties are aware of their respective roles.

While payment schedules, claims history, and penalties for fraudulent claims are important aspects of an insurance contract, they are not the primary focus of the terms and conditions. Payment schedules would typically be detailed in the billing section of the policy, a summary of the insurer's claims history may be found in marketing materials or documentation but does not affect individual policies, and penalties for fraudulent claims would generally be addressed under a separate section regarding claims and conduct rather than within the terms and conditions themselves.